Raleigh, North Carolina — As part of a deal between the state Insurance Department and the industry, North Carolina homeowners’ insurance rates will go up by about 15% on average by the middle of 2026.
The agreement revealed by state Insurance Commissioner Mike Causey on Friday is different from what the North Carolina Rate Bureau, which speaks for insurance companies, asked for in January 2024: an overall average increase of 42.2%.
Causey officially turned down the bureau’s request last year. He is an elected official who started his third term earlier this month. That led to a formal hearing that started in October and went on for several weeks, with arguments, witnesses, and proof. The state’s Insurance Department said that its experts would say that rates should go up or down by no more than 3%.
There was no settlement, so the hearing officer and Causey would have worked together to decide what the new rates should be. The Rate Bureau could have gone to court to fight that ruling.
In a news release, Causey said that the planned rate hikes “are enough to make sure that insurance companies, who have paid out large amounts due to natural disasters and face rising reinsurance costs due to national catastrophes, have enough funds on hand to pay claims.”
The bureau said that its big request was due to “severely inadequate” premium rates to cover claims, as well as high inflation, especially in building materials. The bureau asked for rises that ranged from a little more than 4% in some mountain areas to over 99% in some beach areas.
The agreed-upon price hikes will happen in two parts and will depend on where you live. On June 1, the base rate will go up by 7.5% overall, and it will go up again by 7.5% on June 1, 2026.
The News & Observer of Raleigh stated that the areas of eastern North Carolina that were hit hard by Hurricanes Matthew in 2016 and Florence in 2018 will likely see the biggest price hikes. For instance, beach areas from Carteret to Brunswick counties will grow by an average of 16% in the middle of 2025 and by another 15.9% in the middle of 2026.
The rates will go up less than usual in places that were hit hard by Hurricane Helene’s historic floods in the fall. For instance, base rates will go up by 4.4% in 2025 and 4.5% in the middle of 2026 in Buncombe, Watauga, and Yancey counties.
Raleigh and Durham are two cities with a lot of people. Over the next two years, base rates will rise by an average of 7.5% each year. Rates would go up by 9.3% in Charlotte in 2025 and by 9.2% in 2026.
According to Causey’s release, the deal also says that the Rate Bureau can’t try to raise rates again before June 1, 2027.
Separately, Jarred Chappell, the COO of the Bureau, said that the settlement was “a step in the right direction,” but that the bureau had asked for a bigger rise “because that’s what recent claims data called for.”
“Storms are stronger and doing more damage, more people are living in areas that are prone to disasters, inflation has been very high in the construction industry, and the cost of reinsurance has gone through the roof.” Every one of these cost factors is still a problem,
There is an exception in North Carolina insurance law called “consent-to-rate.” This lets insurance companies cover high-risk homes as long as the homeowners agree to pay premiums that are up to 250% of the bureau’s rate.
Some insurers have left parts of North Carolina that are prone to disasters, but this one exception has kept a lot of home insurers from leaving the state. A news story from 2022 said that consent-to-rate policies set about 40% of the state’s homeowner’s policies.
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