What’s Going On With North Carolina Homeowners Insurance?
After years of decreasing rates North Carolina is beginning to see the cost of homeowner insurance increase. Unfortunately most people will not know about it until they get the bill for their renewal. After many years of being conditioned to decreasing premiums upon renewal, this news will come as quite a shock to people already stretched thin by this economy.
It is our hope that we can ease the shock a little by explaining some of the reasons for the increase.
Profitability = Healthy Insurance Company
The Property and Casualty insurance industry has only made a profit on homeowners insurance in four (4) out of the past 20 years. “So?”
So, this is important because like any other for profit business, insurance companies must remain profitable in order to do their jobs. Quite simply a healthy insurance company has the money to pay a claim. An unhealthy one does not.
In 2011, the industry had a combined ratio of 107.2%, which means that for every dollar of premium they collected they paid out $107.20.
Adding to that is the fact that their investment income is at an all time low. In fact, industry investment returns are the lowest since 1947.
When Catastrophe Strikes…
2011 was a record year for catastrophic events which lead to massive amounts of claims being filed. It was the worst year for catastrophic events since anyone started tracking such data. Tornados swept through the South and Midwest, hail storms ravaged much of the country east of the Mississippi, and of course there was Hurricane Irene.
The Forced “Bundle”
As a result, insurance companies are getting very picky as to what risks they will insure. Most companies writing insurance in North Carolina will no longer just insure your home. In order to obtain homeowners insurance they are requiring that they also insure your autos. If you have a seasonal or secondary home you may find it very difficult to buy insurance for it at all, and if you do be prepared to pay.
The Good News
Not all is gloom and doom. Yes, rates for homeowners insurance are increasing, but by bundling your insurance policies with the same company you can take advantage of discounts and credits that can help reduce the impact of a rate increase. That makes for good business for everyone.
Make sure that you talk with your Independent Insurance Agent and ask that they explore many different insurance companies and the discounts available. This is a time when you want to buy true value, not just price.
Working with an Independent Insurance Agent gives you a huge advantage to those folks just ‘going it alone’ on the internet. An Independent Insurance Agent can bring a lot to the table from being able to shop the market on your behalf, to helping you truly understand your insurance, to holding your hand and guiding you through the claims process.
Let us know how we can help you. We’re happy to answer any questions you might have.
