N.C. rate increase hearings underway as insurance commissioner election nears

North Carolinians will most likely have to wait until after Election Day, and the outcome of their state's race for insurance commissioner, to learn if a 42% increase in insurance rates will be approved.

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"This is going to be a really important bellwether, in terms of voter sentiment, in terms of this divide between availability and affordability of coverage, and ensuring that carriers are present in the state and are able to make good on their obligations," said Tim Zawacki, principal research analyst at S&P Global Market Intelligence.

The state's department of insurance (NCDOI) held hearings from October 7 to 10 and again starting on October 23, on the increase requested on January 3 by the North Carolina Rate Bureau (NCRB), which represents insurers in the state. When a commissioner has challenged a NCRB request, the matter goes to a hearing. The Raleigh News & Observer reported that property insurance rates have increased 16 previous times during commissioner Mike Causey's two terms, without a challenge or a hearing. This includes three previous homeowners' insurance rate increases during his terms.

The rate hearing started just a little over a week after Hurricane Helene hit the western part of North Carolina. The commissioner or a representative presides over the hearing, in which representatives for both parties testify for and against the increase. Causey turned over the role of presiding officer for the hearing to Amy Funderburk, general counsel of the department of insurance. NCDOI attorneys Terence D. Friedman and Shannon Wharry presented a case against the increase.

Causey's challenger in the election, Natasha Marcus, said in a press conference outside the NCDOI building on October 7 that the hearing was timed for maximum political benefit. "By delaying the start of the hearing until October 7, knowing it will last weeks, he won't have to make a decision on the rate request until after the election is over," Marcus said. "Voters won't get a chance to weigh in and hold him accountable for how he did his job."

According to a NCDOI spokesperson, the hearings are continuing, but the full schedule was not available.

The presiding officer has 45 days after the hearing's conclusion to rule on the bureau's request, which with the recent resumption would be December 2.

Witnesses in the week of hearings included three testifying for NCRB: Paul Anderson, Wisconsin-based actuarial and rate setting expert for Milliman, Inc.; Joanna Biliorous, general manager, NCRB; and Dr. George Zanjani, finance professor and chair of insurance dept at the University of Alabama. Another witness, Minchong Mao, senior managing director, actuary, Aon, was a witness for NCDOI.

The rate increase is necessary due to rising costs and risks for insurers, as NCRB's witnesses testified, according to a search of 719 pages of transcripts assisted by Google Gemini AI. NCDOI witnesses, including Minchong Mao from Aon, stated that the department sought to ensure the rate request is supported by reliable data and sound actuarial practices.

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The NCDOI today published another 211 pages of transcripts from the October 23 sessions. They are mostly testimony by Paul Ericksen, principal, actuarial consulting at Verisk, on behalf of NCRB, including discussions about "reasonability of demand surge," which is an increase in demand for rebuilding materials after a hurricane or natural disaster.

The testimony also has 44 of its pages redacted as that information is confidential because it is proprietary to Verisk.