Insurance markets vary significantly across the United States, and North Carolina’s market is distinct due to two main factors. The state experienced significant damage from Hurricane Helene in 2024, accounting for $60 billion of the hurricane’s total $80 billion damages. Additionally, North Carolina remains the only state using its own statistical rate bureau to set insurance rates.
The catastrophic impact of Hurricane Helene was substantial, with 250 lives lost across several states, including 107 in North Carolina. Property damage in North Carolina amounted to $5,394 per resident or 9% of the state’s GDP. This is a considerable burden given that the median family income in North Carolina is below the national average at $69,904.
Homeowners’ insurance costs an average of $2,087 annually in North Carolina, which is about 3.3% of the median family income. However, only $6.3 billion of the losses from Hurricane Helene were covered by insurance policies.
One suggested reform to strengthen North Carolina’s insurance market involves updating its rating bureau system. Historically, statistical rating bureaus like the Mutual Insurance Rating Bureau helped insurers set actuarially sound rates by pooling data before advanced computing became available. However, economist Paul Joskow noted that these bureaus could act like cartels leading to high prices and excess capacity.
Currently, the North Carolina Rate Bureau (NCRB) mandates insurers use its rates, which can conflict with consumer interests as seen when Insurance Commissioner Mike Causey negotiated lower premium increases than those requested by insurers: “The insurance companies wanted to raise our homeowners’ rates up to 99.4% in some areas and an average 42.2% statewide in a single year,” he said.
Insurers facing higher risks can charge more through a “consent to rate” process if standard rates are inadequate. Yet some insurers have ceased policy renewals in certain regions due to unmet rate increase requests.
In response to financial challenges posed by Hurricane Helene, many insurers reported unsustainable loss ratios for 2024 despite some achieving positive results through reinsurance strategies and product diversification.
For those unable to secure coverage through traditional means, entities like the North Carolina Joint Underwriting Association (NCJUA) and Coastal Property Insurance Pool offer alternatives for properties at elevated risk.
Proposed measures for strengthening North Carolina’s homeowners’ insurance market include reforming NCRB operations to encourage competition and increasing flood insurance uptake among residents. Strengthening building codes and programs like “Strengthen Your Roof” could also mitigate future storm damage impacts.
North Carolinians continue to seek improvements within their unique insurance landscape post-Hurricane Helene’s devastation.
