Requested hike in homeowners' insurance won't pass muster
Published January 9, 2014
Editorial by News and Observer, January 8, 2014.
Insurers must have taken it literally when they attended their last industry convention and some inspirational speaker encouraged them to “reach for the skies” or “aim high” or “dare to dream big.” For those insurers are asking for another big rate increase in North Carolina for homeowners’ insurance rates, an average boost of 25 percent.
Now, this is the first volley in a game the industry plays periodically. First, it puts in for a huge rate hike, then Insurance Commissioner Wayne Goodwin expresses shock and chagrin and then he does a little rhetorical blast on the industry. In the end, the industry settles for a smaller hike rather than go to court to fight Goodwin.
But it must be said that 25 percent is a doozie of a request. Even Goodwin seemed genuinely shocked at that amount after an increase just last year, saying he was “appalled” and urging insurers to just withdraw the request. He said he wouldn’t even think of a settlement conference that started at 25 percent.
Increases would vary depending where people lived. Some beach homeowners would pay 35 percent more under the industry request, but other homeowners might get a slight decrease.
The insurers, through the N.C. Rate Bureau, defend the rate hike requests as necessary when they face lots of claims. Some companies won’t write insurance for homeowners unless those individuals also buy car insurance from them.
Goodwin, who has certainly been a consumer-friendly commissioner, is the one who stands between policy-holders and excessive rates, and this kind of request demonstrates why it’s important that the commissioner have the power he has. There have been flirtations with changing that on the part of some lawmakers in the General Assembly.
But it should not change. Now, let the dance begin.
January 9, 2014 at 9:41 am
Norm Kelly says:
'Some beach homeowners would pay 35 percent more '.
And? What's the challenge with this? Why shouldn't this be?
Two things are driving the rate increase for beach property owners. First and foremost is the nature of the area the property is located in. The beach is more hazardous, generally speaking, than living in Raleigh, at least from an insurance claim standpoint. Living in Raleigh, we generally do NOT have to worry about beach erosion taking out our foundations. Living in Raleigh, we generally do NOT have to worry about storm surges.
So there are 2 choices when it comes to insurance rates for ALL properties in the state. The insurance companies can charge the beach people a lower premium and charge the rest of us a little bit more for our insurance. The challenge with this is that it's not fair for my property insurance premiums to be artificially inflated, outside the actuarial calculations. The people who do buy property in a more hazardous zone should not complain when they are charged the right price for the risk they are taking. If I didn't take the risk, why should I pay the price? Lefties, please feel free to chime in here with your favorite line about 'fair share'. This is the direction the state has taken for many years. As I recall, this is the first time in over 100 years that the Republicans have had control of Raleigh. This means the FACT is that it was the DemocRATS who came up with the idea of the state FORCING insurance companies to artificially set property insurance rates. This idea hurt more people than it helped. Thanks Demons! My wallet appreciates you looking out for me once again. Another example of government interference in a market disrupting the market rather than making it a better market. Like every other market the government tries to interfere with! (watch health care insurance in 2014; it'll have the same negative affect when socialized medicine gets even more involved.)
The alternative, proper, and more fair way to calculate insurance premiums, which sounds like the direction this insurance companies request is headed, is to charge people for the hazard they CHOOSE to accept. While I agree that a 25% average increase in premiums sounds high, I have no idea what the statistics are for claims in the state. I also have no idea what the claims are in different areas of the state. But one fact remains. The beach is the more hazardous area. Having people who purposely own property at the beach pay more for their insurance is the RIGHT thing to do. If it costs the insurance companies more to restore the property when an event occurs, then the owner of the property should pay for the higher risk. My wallet should NOT be lighter because a family I don't know chooses to live at the beach. My family should NOT suffer financially because someone else chose to take risks. Would it be right if my life insurance premium were artificially inflated because someone I work with chose to either skydive, base jump, or hot-air-balloon? Does the state allow this artificial inflation of premiums to occur? I believe not. But the state FORCES insurance companies to charge high-risk properties a lower premium to encourage people to take a higher risk. Once again, for all those who lack the ability to think straight, my premiums should NOT be forced higher by state law because it makes some politician FEEL GOOD! Feeling good if for lefties. Feeling good is NOT for thinkers. Feeling good is NOT for people who want things to work properly. Feeling good is for people who own cats (or so I'm told. I was happier when my cat was finally gone than I ever was when the stupid furball occupied my house!). So if we have people in Raleigh who want to feel good, how 'bout some of you lefties get together, buy them cats, and we all get more appropriate, market driven property insurance rates?
Do I want a 25% rate hike? No. This is simply the game the insurance companies need to play in order to get the rate hike they want. And in the end, the insurance commissioner will agree to a lower rate hike, so he'll feel good too. See, you lefties get to save some money because you won't have to buy the commissioner a cat! We all win.
