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Homeowners say they’re being forced to agree to higher insurance premiums

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WINSTON-SALEM, N.C. — North Carolina homeowners say they are being forced to agree to higher insurance premiums.

Many of the major insurance companies are sending out “Consent to Rate” letters asking homeowners for permission to raise their premium above the state’s set rate. If homeowners don’t agree to the increase, the insurance company will cancel the policy.  Coastal property owners were the first to see the letters several years ago. Now, they are showing up in the Piedmont-Triad.

PDF: Consent to Rate form (Courtesy: Dept. of Insurance)

Officials with the insurance companies — Allstate, Nationwide and State Farm — say they have no choice but go the “Consent to Rate” route since the elected insurance commissioner has denied requests for rate increases over the past several years.  The last approved rate increase on homeowners insurance, which limited the increase to around 4.05 %, was in 2009.  The insurance industry had requested a hike of about 19.4 % that year.

An official with NC Farm Bureau, the state’s third largest insurer, says they are currently implementing the “Consent to Rate” on an individual case-by-case bases and to owners of manufacturing homes.   Last July Farm Bureau raised premiums on 382,000 homeowners across the state by 6 percent through eliminating discounts.  The company also started requiring homeowners who made a claim within the past five year to also purchase an auto policy or lose coverage on their home.

The “Consent to Rate” form is the only way many insurance companies believe they can offer affordable insurance to homeowners.  “It’s just not right,” said homeowner Lisa Moody. “They are going to cancel me if I don’t agree to let them go above the state rate? That’s just not right.”

A spokeswoman for the Department of Insurance says it is completely legal. She suggests homeowners who don’t want to agree to the rate increase should shop around using independent agents. Independent agents typically represent multiple companies, many of which are not implementing the increase.

“It’s becoming more and more prominent now,” says independent agent Brian Leftwich with Alliance Insurance Services in Winston-Salem.  Leftwich says he’s seen more customers coming in looking for better rates. “As the months go on the calls seems to increase.”