The agency tasked with representing private insurers in North Carolina is calling for double-digit homeowners rate increase, citing a new approach to catastrophe modelling and increases in reinsurance prices.
The North Carolina Rate Bureau (NCRB) sent notice to the state’s insurance regulator that it was requesting an average 17.9 percent statewide hike. Coastal homeowners would see an even greater increase with up to a 25 percent average jump in premiums, according to the filing.
“This filing incorporates a number of changes as compared to previous filings,” said NCRB General Manager Raymond Evans in a recent letter the state’s insurance regulator. “These change include the use of two hurricane catastrophe models and the incorporation of the costs of reinsurance based on the latest actuarial reinsurance market information.”
According to the filing, broker Aon Benfield prepared a “blended catastrophe model” for NCRB using the results of both AIR Worldwide and Risk Management Solutions (RMS) products. The blended model was required following a North Carolina law requiring “use of more than one catastrophe model for property filings.” Previously, only AIR model was used for rate filings.
Separately, the NCRB cited reinsurance market prices as the impetus for the increase, again employing Aon Benfield to calculate the net cost of reinsurance at the individual territory level based “on its actual market experience.” Previously, consulting actuary Milliman calculate reinsurance prices according to four territory “zone.”
The NCRB is hoping for better luck on its previous rate requests.
This would make the first request for an increase from the agency since 2014 when a 17.7 percent increase was rejected. A 2012 rate increase was later negotiated down to a 7 percent increase after a significant public outcry.
Public comment on the rate increase end on Friday, December 29.If the North Carolina Department of Insurance does not agree with the requested rates, it will negotiate directly with the NCRB.
If a settlement cannot be reached within 50 days, a hearing will be called.
Risk Market News Newsletter
Join the newsletter to receive the latest updates in your inbox.