By Jordan Meadows | Staff Writer
In recent months, North Carolina homeowners have seen a surge in their insurance premiums, a trend that has left many questioning the stability of the state’s insurance market.
In January 2024, Insurance Commissioner Mike Causey announced that the North Carolina Department of Insurance had reached a settlement with insurance companies over their proposed rate increases. The North Carolina Rate Bureau, which represents homeowners’ insurance companies in the state, initially sought an average 42.2% rate hike, with some areas facing increases as high as 99.4%.
The settlement, which will raise the average statewide rate by 7.5% on June 1, 2025, and another 7.5% in 2026, has been hailed as a partial victory for consumers, but the broader issue of rising insurance rates in the state is far from resolved.
While the settlement addresses homeowners’ insurance rates, North Carolina residents are also facing a proposed 22.6% average increase in automobile insurance rates, which will be subject to a public hearing in September 2025. Several factors are contributing to these rising premiums, including the increasing cost of vehicle repairs due to advanced technology, higher vehicle replacement costs, and a rise in litigated claims. The state’s rapid population growth is also driving up demand for insurance coverage.
However, the situation is even more complicated when considering the impact of natural disasters. North Carolina has recently been identified as the number one state at risk for wildfires, exacerbating the already high risk of hurricanes along the coast.
“We’re growing so quickly here in North Carolina,” said Philip Jackson with the North Carolina Forest Service. “With our human-caused fires, those are expected to increase.”
I spoke with an insurance broker based in Charlotte, NC, who shed light on the deeper issues behind these rising premiums. According to him, North Carolina is facing an “insurance crisis” that mirrors the challenges seen in other states like Florida and California.
“There used to be headlines when you would get a four or five percent rate increase on homeowners insurance in NC and the insurance commissioner’s office and insurance companies would be battling it out in court. Whoever won the battle would be on TV the next day. Fast forward now, and I’m seeing 35-40% increases and not seeing anything on TV,” he said.
This rapid increase in rates is causing a stir among homeowners, many of whom are reaching out to brokers like him in search of alternatives.
“Customers call me and bite my head off, looking for new companies, and I have to tell them that the rate will be the same at those others too,” the broker added.
He attributes much of the problem to the automation systems that insurance companies use to calculate premiums. These systems rely heavily on factors such as zip codes, past claims, and speculative future risks.
“The system has become very complicated in the last few years, especially since COVID,” he explained.
The broker also notes that many companies are no longer accepting new business because the numbers suggest that states like North Carolina are becoming too risky.
“Simple things like the zip code you live in can affect not only homeowners insurance but also automobile insurance. Companies are pulling out because they believe the state as a whole, not just the coastal areas, is at a higher risk now,” he said.
As homeowners face higher premiums, the question he arrives at is the feasibility of the rate increase: “Who can absorb a 30% increase in insurance with inflation where it’s at? That is significant! We’re going from policies of $1000 now being $2000 and approaching $3000. Customers are just now starting to see it—they’re not expecting it,” the broker emphasized.
One of the major issues, the broker argues, is the lack of transparency and communication between insurance companies and consumers.
“When you start adding factors to that calculation, that’s why the rates have changed so fast,” he said. “Now, they’re saying, ‘Let’s add in paid-to-date claims and predictability of how much we’ll have to pay out’. You put that on top of what they already had and you create a perfect storm of raising insurance rates.”
The upcoming 7.5% rate increase set to take effect in June 2025 is just the beginning. With the ongoing risk of natural disasters, the uncertainty of future claims payouts, and the increasing complexity of insurance rate calculations, North Carolinians can expect more rate hikes in the years to come.
However, Commissioner Causey remains hopeful that the state’s efforts to limit drastic increases will offer some relief. “These rates are sufficient to make sure that insurance companies, who have paid out large sums due to natural disasters and face increasing reinsurance costs due to national catastrophes, have adequate funds on hand to pay claims,” he said.
