North Carolina Court Rejects Counties’ Challenge to 2008 Homeowners Rates

Municipalities do not have standing to challenge decisions on insurance rates issued by the state insurance department, a North Carolina Court of Appeals has ruled.

Twelve North Carolina counties, led by dare County, along with 10 towns and two private parties had sued to protest a 2008 rate ruling that raised homeowners insurance rates in some cases up to 29 percent while lowering rates in a few other communities.

However, the appeals court decision written by Justice Sam Ervin held that under current state law, only parties to the actual rate proceedings have the right to seek judicial review of insurance rate decisions. The North Carolina Insurance Department and the North Carolina Rate Bureau, which collects data and recommends rates on behalf of private insurers, were the only parties to the proceedings for the 2008 rates, the court ruled.

The ruling upheld a lower court decision in Wake County Superior Court.

In 2008, former Insurance Commissioner Jim Long and the Rate Bureau negotiated a consent order which in effect raised statewide average homeowners’ insurance rates by 3.89 percent, but included hikes for property owners in coastal territories of from 6.5 percent to 29.8 percent, and to reduce rates for condominium owners and tenants in coastal territories by 2 percent to 25 percent. The consent order also divided one of the territories used to establish rates for homeowners’ insurance located in the coastal area into two separate territories.

Insurers had originally requested even higher rate increase.

The municipalities’ spokesperson Robert Outten, Dare County’s attorney and assistant manager, had argued that the insurance department approved the rate increase before coastal residents knew insurers had requested them, and that the insurance department should have held public hearings.

“We don’t think they followed the proper procedures,” Outten said.

But the court agreed with attorneys for the state agency and the Rate Bureau that state law makes the insurance commissioner responsible for representing insureds.

The court seemed sympathetic to the plaintiffs’ cause but said that only the Legislature could change state law regarding who can appeal insurance rates.

The effort to force a review of the 2008 rate decision was supported by BASE, the Business Alliance for a Sound Economy, a lobbying organization of real estate trade associations and businesses.

NC Court Appeals Dare v NCDOI on Rate Regulation

Topics North Carolina Homeowners