5 On Your Side

NC commissioner: Some homeowner insurance rates 'very much a problem'

Posted July 21, 2014

— Most people think they already pay too much for homeowner's insurance, but what if the bill suddenly jumped 33 percent or even 70 percent? Many people are getting letters saying if they don’t agree to it, their coverage will be canceled.

The letters from insurance companies are going out to hundreds of thousands of people across the state. The state insurance commissioner calls this a problem. Many of the people 5 On Your Side heard from got what's called a "consent to rate" letter and said they feel bullied.

Randi Gordon bought a home in Fuquay-Varina 16 years ago and says she has never filed a claim. So she was shocked by a letter from Travelers insurance, saying her renewal premium would be higher than the maximum rate allowed in the state. If she didn't sign the consent form within 10 days, she'd be dropped.

“Ten days is ridiculous because you don't have a chance really to go and shop around too much within 10 days,” she said. “That’s why I call it holding people hostage.”

Another homeowner, who also never had a claim, received a letter asking for 33 percent more than the state-approved cap. His Liberty Mutual policy went up almost $200 a year.

WRAL found another homeowner who filed two claims totaling $3,600 and faced a 70 percent yearly increase of more than $600.

They all had the same question.

“What is the point of setting rates if the insurance companies can basically ignore them?” Gordon asked.

State law allows insurers to charge up to 250 percent above the maximum rate set by North Carolina Insurance Commissioner Wayne Goodwin.

“Things that are done to force – directly or indirectly – the public to bypass that cap is very frustrating, very much a problem,” he said.

Goodwin says the decades-old law allowing "consent to rate" letters was intended for rare circumstances involving very high-risk customers.

“The reason that insurance companies are using this as their go-to more so than the exception is the insurance companies believe – they allege – they're not allowed to charge enough, and I'm sure that (WRAL) viewers probably have an opinion on that," Goodwin said.

Ray Evans heads the North Carolina Rate Bureau, which works on behalf of insurance carriers to request rate adjustments from Goodwin.

“If insurance companies don't get enough premium to insure the risk, then they don't want to do business here, perhaps,” he said.

Evans reiterates what insurers told 5 On Your Side’s complainants – the higher rates are needed to cover catastrophic losses from storms, such as hurricanes and tornadoes. As for who is most likely to get a "consent to rate" letter, Evans says he thinks each company has its own set of criteria.

“It probably varies a great deal from carrier to carrier,” he said.

Evans says insurers consider risk factors such as how long you've been with the company, whether you have multiple policies, such as home and auto coverage, whether your home is maintained, your credit score and a big one is any claim you make.

Even though policies cover relatively minor claims, file and your insurer may label you high risk, raise your premium or even drop you.

“Something a homeowner needs to keep in mind: Is this a claim worth making in the long run or is it better to hold out use of your insurance for the most catastrophic of claims?” Goodwin said.

To lower your premium, shop around, raise your deductible and bundle your coverage. That's what one customer did, and she saved $700 a year.

As for Gordon, she found a new company, adjusted her policy and saved $278.

It’s important to note that the consent to rate forms do not have an end date. So once you sign it, your insurance company can increase your rate anytime in the future. If you don't sign it, they can drop you. So don't ignore it, do something. Try to negotiate with the company or shop around for a better rate. Always answer letters from insurance companies.

NC homeowner rate filings

Filed 12/29/06 – Effective 5/1/07

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Filed 12/8/08 – Effective 5/1/09

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Filed 10/1/12 – Effective 7/1/13

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Filed 1/3/14 – Proposed rates

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Source: North Carolina Rate Bureau


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  • lprop Jul 23, 2014

    Everything is passed on to the consumer who has no way to increase their income .

  • WralCensorsAreBias Jul 23, 2014

    not sure why anyone is surprised, this has been warned for months. if you aren't paying attention then you should prepare yourself for your huge rate hike.

    or you have another option,

    you can refuse to pay it, don't smoke or light candles in your home, pray a storm doesn't hit and tell your mortgage company to go jump.

    Until we refuse to pay these continued fleecings we might as well bend over and call it a day for our bank accounts.

  • euimport1 Jul 22, 2014

    very much a problem? no joke. where's the solution then? is it that hard to figure out that the insurance companies rake in billions? I can't feel sorry for them at any time. no one else should either.

  • Steven Arbogast Jul 22, 2014
    user avatar

    View quoted thread

    1. Please not the source of this "article"...THE INSURANCE INDUSTRY!
    2. The Beach Plan is not the plan of first resort and thus overused. It is the ONLY plan as no commercial insurance company will provide coverage for "named windstorms". None, zip, nada. All commercial insurance companies stopped insuring for storms in approx. 1997 (the year following Bertha and Fran. What a coincidence!) So the "poor" insurance industry whining about being assesed is the result of their dumping all coastal issues on the state. After all, they wouldn't want to have to pay anything would they?
    3. Be very careful with your blaming coastal residents. Ask folks on the west coast and in the midwest about what the insurance companies did regarding earthquake claims and tornadoes.
    4. Financial bottom line for the industry is pretty healthy and I am not aware of insurance companies going bancrupt.

  • nothx2 Jul 22, 2014

    Ever since I took early retirement in 2009, I started paying attention to all of my house-hold expenses - e.g. if I find out any company nickel and dime me while trying to jack-up their fees, I'll switch. So far, for Home-Owner's insurance, it went from AllState->StateFarm->Metlife Auto and Home; for Auto insurance, it went from AllState->StateFarm->GEICO. So far I managed to save at least $1500.00ish every year.

  • cruzinlong Jul 22, 2014

    The beach plan :
    below is an article from 2009 but sure sounds like we that are non beach home owners sure are helping to cover the claims cost of damages done to homes down there. ( see paragraph 4)
    http://allchoiceinsurance.com/insurance/north-carolina-homeowners-insurance-rates-are-going-up/If anything has changed since 2009 I'd like to hear about it and welcome the correction.

  • nothx2 Jul 22, 2014

    My former AllState insurance agent even though I've insured with him for my HomeOwner's insurance for many years - about three years ago, I sent him an Email with some requests to have my HOI policy changed and to be sure he understood what I wanted from him, I went to his office and had him pulled my Email and I reiterated what I needed from him. Well a year later, not only he failed to do anything for my HomeOwner's insurance policy, he jacked up my premium with a whopping 33.18% increase (from $1519 to $2023). Even though he constantly proclaimed that he's my "exclusive agent", I switched to another Insurance company afterwards. Like the old-saying goes, one can never fix "stupidity".

  • tbenjamin13 Jul 22, 2014

    We have State Farm, multiple policies, no claims, pay on time and recently had a policy increase because a GPS project the insurance company was doing noticed we are approximately 100 feet (yes, feet!) too far from the nearest fire station (not fire hydrant which is approximately 20 feet from the house) and therefore had to raise our rates a couple hundred dollars. We just got the consent to rate letter 2 days ago and it has to be signed in 2 weeks or they will drop us. I will be interested to see what the increase will be. In the next letter I got from them the same day, they encourage us to contact our insurance agent to have a "discount double check" to see if they can save us money. I'm sure our agent will have a laundry list of folks to call back about the consent letter his customers received, no time for a double check....

  • cruzinlong Jul 22, 2014

    View quoted thread

    some would not agree with you, like myself.
    they raised our homeowners $ 400.00 due to being 3/10 of a mile over the 6 mile limit from a fire station, on top of that here come the yearly hike adjustments. Have had ZERO CLAIMS and have vehicle insurance with them , too...those two factors don't help.
    Now I get a consent to rate form telling us our insurance will go UP close to $ 300.00 more a year, why ? who knows.
    Will put us close to paying 2K a year and we don't live in a mansion by any stretch of the imagination. If this keeps up will have to do without insurance...not a wise choice but beats living on the streets because I can't afford homeowners ( or health and vehicle ) insurance .

  • ahsvw Jul 22, 2014

    Not all companies selling home insurance use Consent to Rate. I use The Members Insurance Company (AAA Motor Club)
    I got a great rate based on packaging and my member discount. I also have a local agent.