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North Carolina Insurers Yearn For Rate Hike on Dwelling Fire and Extended Coverage Insurance Policies

With Hurricane Irene fast approaching the east coast of the United States, we all have a tendency to wonder about our Homeowners Insurance coverage and if we have enough.  It was a very interesting day in the  Pennsylvania offices of InsureDirect.com.  Normally the calls are mostly for auto insurance quotes throughout the country. Today; our switchboard was jammed with calls from Homeowners on the east coast wanting to buy  a new homeowners insurance policy or increase the property and liability limits on their existing policies.  There was only one problem; prior to any major weather event, both car insurance and homeowners insurance carriers restrict both binding new risks and increasing their exposure on existing risks. It is during times like these when the actuaries at  insurance carriers look at the risks the have and how much premium they are collecting to protect these exposures.  Homeowner Insurance Carriers in North Carolina recently made some observations and requested rates increases for some of their products.

On dwelling fire and extended coverage policies: A raise from 7% to 25% (has about an average of 20.9 percent statewide) for 2011 was requested by North Carolina Insurers. There would be about 570,000 policy holders that will be greatly affected once these higher rates are approved. The biggest increases will be on those which are in coastal territories of North Carolina. “The dwelling fire and extended coverage rate filing received by the insurance department was from the North Carolina Rate Bureau,” said Insurance Commissioner Wayne Goodwin, one who was assigned to approve any increases. North Carolina Rate Bureau, which is not affiliated with the DOI, is the representative of the property insurance companies who are writing business in the state.

Dwelling fire policies are sold to non-owner occupied residences which include investment properties, rental properties, and some other properties that are not used and occupied full-time by the property owner. Dwelling and extended coverage policies generally cover perils that extend beyond fire and lightning, these could be damage to physical dwelling due to hail, smoke, typhoon, civil commotion, riots, and aircraft or vehicle damage.

The rating process was taken from the 2008 and 2009 data. Regulators from the DOI made several objections to the filing including that it is based on old data. Although the 2008 and 2009 data was available, the rate bureau failed to compile the data and used it in the file. There was a public comment session spearheaded by Goodwin last January 24 after more than 800 policyholders issued protests against the rate increase. Written comments from the people were also finalized last January 31. Goodwin scheduled the hearing last June 21, but he did not indicate when his last ruling on the rate filing might be ready.

-Mike