By: Jordan Meadows
Staff Writer
As homeowners in North Carolina face escalating insurance premiums, experts continue to grapple with the underlying reasons behind these hikes. The situation has become increasingly dire, with some homeowners seeing double-digit percentage increases in just a few years.
According to Travis Fain, a communications consultant with the North Carolina Rate Bureau, these rising premiums are part of a broader national trend.
“If you look at the federal data, it’s pretty clear—we are living in the most expensive time for natural disasters in U.S. history,” Fain said in an email.
Fain emphasizes that NC, like many states, faces unique challenges when determining insurance rates. NC is one of the 11 states with an elected insurance commissioner, ideally holding that office accountable to the public. He added that the North Carolina Rate Bureau is where insurers convene to negotiate rate compromises. Each insurer has different coverage offerings, and factors like regional risk and inflation must be taken into account.
One of the most significant drivers of rate increases, according to Fain, is climate change. Rising natural disaster risks, including hurricanes and wildfires, are increasing the likelihood of insurance claims—even in NC.
Furthermore, Fain points to the indirect impact of factors like tariffs on Canadian lumber and concrete, which escalate building costs. This, in turn, raises the cost of rebuilding a home and, by extension, the cost of insurance to cover it.
“Insurance companies don’t just look at weather patterns in the state; they factor in the entire world’s weather events and potential risks,” Fain explains.
Additionally, population growth in North Carolina compounds the issue. As more people move to the state, the demand for insurance coverage increases, adding more risk for insurers. But while climate change and population growth are significant contributors, other less-discussed factors also play a role.
“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.”
Fain acknowledges that fraudulent claims do exist, but the aftermath of a natural disaster often involves a mix of legitimate claims and situations where it’s difficult for residents to gather the necessary information to file claims properly.
The insurance rate structure and procedures are not static; the North Carolina General Assembly holds legislative power over the Rate Bureau, which means they have the authority to modify the process for determining rates. They could even alter how rates are set or adjust the Bureau’s operations if they wanted.
In January 2024, North Carolina’s Insurance Commissioner Mike Causey reached a settlement with insurers regarding proposed rate hikes. The North Carolina Rate Bureau had initially sought an average 42.2% increase, with some areas potentially seeing hikes as steep as 99.4%. The settlement, which will raise rates by 7.5% in both June 2025 and 2026, was viewed as a partial victory for consumers, though the overall problem of rising premiums remains unresolved.
Homeowners are particularly concerned with the broader trend affecting both property and automobile insurance, which could see a 22.6% hike in auto insurance rates by 2025. This is due to several factors, including increased vehicle repair costs, higher vehicle replacement prices, and a rise in litigated claims.
This confluence of factors—climate change, population growth, and the rising costs of construction materials—has led to a situation where some insurance brokers describe North Carolina’s insurance landscape as akin to a crisis.
One Charlotte-based broker shared his concerns, noting that, “There used to be headlines when you’d get a four or five percent rate increase on homeowners insurance in NC. Fast forward, and now I’m seeing 35-40% increases without a peep from the media.”
This surge in premiums is due, in part, to changes in how insurers calculate rates. The automation systems used by many insurance companies now factor in numerous variables, including zip codes, past claims, and speculative risk assessments for future natural disasters. These systems, the broker explained, have grown increasingly complex over the years.
The concern for many North Carolinians is the long-term impact of these rising rates. The upcoming 7.5% rate increase scheduled for June 2025 is just the beginning.
“When you start adding factors to the calculation of determining insurance rates, that’s when the rates have changed so fast,” the broker 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.”
Fain, however, remains cautiously optimistic. “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, have adequate funds on hand to pay claims,” he said.
“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.”
For homeowners, the prospect of continually rising premiums is a daunting reality. The hope remains that the legislative efforts underway, coupled with the ongoing work of the Department of Insurance, can mitigate some of the financial strain on consumers.
