North Carolina homeowners will see a 15% average increase in their base insurance premiums by mid-2026 under a settlement reached between the North Carolina Department of Insurance (NCDOI) and the insurance industry. This agreement, announced on January 17, 2025, follows a formal request by the North Carolina Rate Bureau, representing insurance companies, for a significantly higher 42.2% increase.
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The settlement concludes a months-long process that began with the Rate Bureau’s initial request in January 2024 and included a formal hearing with weeks of testimony and evidence. NCDOI Commissioner Mike Causey rejected the bureau’s initial request, leading to the hearing where the Department argued for lower rate adjustments or increases of less than 3%. The settlement avoids further legal challenges that could have followed a decision by a hearing officer.
Factors Driving the Increase
The North Carolina Rate Bureau cited several factors contributing to its initial request for a substantial rate hike. These included high inflation impacting building material costs, the financial strain of recent catastrophic storms, and what the bureau deemed “severely inadequate” existing premiums to cover claims. The initial proposed increases ranged from just over 4% in some mountain regions to a staggering 99% in certain coastal areas. Commissioner Causey acknowledged the pressures on insurers, stating the agreed-upon increases ensure companies “have adequate funds on hand to pay claims” considering payouts for natural disasters and rising reinsurance costs.
Regional Variations in Rate Hikes
The settlement outlines a two-phased approach to implementing the 15% average increase. Homeowners will see a 7.5% increase on June 1, 2025, followed by an additional 7.5% increase on June 1, 2026. However, the actual increase will vary by location.
Coastal regions, particularly those significantly impacted by Hurricane Matthew in 2016 and Hurricane Florence in 2018, will experience the highest increases. Areas from Carteret to Brunswick counties can expect a 16% increase in mid-2025 and a further 15.9% increase in mid-2026. Conversely, areas hardest hit by Hurricane Helene’s flooding in the fall of 2024 will see below-average increases. Buncombe, Watauga, and Yancey counties, for example, will experience increases of 4.4% in 2025 and 4.5% in 2026.
In major metropolitan areas, Raleigh and Durham will see a 7.5% increase in each of the next two years, while Charlotte will face increases of 9.3% in 2025 and 9.2% in 2026.
Looking Ahead
This settlement prevents the Rate Bureau from initiating another rate increase request before June 1, 2027, providing a period of stability for homeowners. The agreement reflects a compromise between the insurance industry’s need for financial stability and the affordability concerns of North Carolina homeowners. The NCDOI emphasizes its commitment to ensuring fair and adequate insurance rates for all North Carolinians.
Key Takeaways
- North Carolina homeowner insurance rates will increase by an average of 15% over two years.
- Increases will be implemented in two phases: 7.5% in June 2025 and 7.5% in June 2026.
- Rate increases vary by location, with coastal areas facing the highest adjustments.
- The settlement prevents further rate increase requests before June 2027.
