North Carolina Rate Bureau Withdraws 19.6% Rate Filing, Plans to Refile Soon

The North Carolina Rate Bureau is alerting all member companies that it has withdrawn its request for a 19.6 percent rate increase on dwelling policies due to a data error on its Dwelling Policy Program revisions announced in April, 2016.

NCRB, which is not part of the North Carolina Department of Insurance (NCDOI) and represents all companies writing property insurance in the state, requested a statewide average rate increase of 19.6 percent for dwelling policies, varying by territory, with a requested effective date of July 1, 2017. This filing included an increase of 37.3 percent for extended coverage (wind) policies, for a total statewide average increase of 19.6 percent.

According to a letter sent by NCRB on Jan. 17, 2017 to its members, the data error that was discovered in December by NCDOI affected the calculation of the base rates incorporated into the relativity revisions.

The revisions, which were announced April 4, 2016 and took effect Jan. 1, 2017, included: protection/construction relativities and deductibles on the fire portion of the policy; the policy form (seasonal and non-seasonal) relativities and the deductible options and deductible factors extended on the coverage portion of the policy; revised base rates (because the relativity changes were filed on an overall revenue-neutral basis); revised windstorm or hail exclusion credits; revised windstorm mitigation credits; and dwelling manual rule revisions related to the revised deductible options.

NCRB said the error affected the base rates that were implemented in five territories: 7, 8, 48, 49, and 52, but did not have an effect on the relativity factor themselves.

The error did, however, impact certain portions of the NCRB’s Dwelling Insurance rate filing, made on Nov. 30, 2016.

“To achieve a revenue neutral change, base rates were adjusted to ensure the relativity changes were revenue neutral on a statewide and by territory basis. When we filed the Dwelling Rate Filing, we used the base rates approved with the relativity filing,” NCRB Chief Operating Officer Joanna Biliouris said in an email to Insurance Journal.

NCDOI discovered the data issues when reviewing the filing and said they needed to be resolved before the filing could move forward. The NCRB Governing Committee voted on Jan. 11, 2017 to withdraw the rate filing and re-file at a later date.

North Carolina Insurance Commissioner Mike Causey, who took office in January, praised his team for catching the error.

“As your Insurance Commissioner, I have pledged to protect consumers as much as possible and this will act as a great first step to making good on that promise to North Carolina,” said Commissioner Causey. “I am proud of my team for catching the issues and saving consumers money on their insurance rates.”

Biliouris said she doesn’t anticipate a significant change in the rate indications, but NCRB won’t know for sure until it runs all of its models with the new data.

NCRB said it will prepare and file the revised base rates with NCDOI with a proposed effective date of June 1, 2017. It will distribute the new base rates as soon as they are approved.

“We realize this is a tight timeline for implementation by our member companies,” NCRB said in its notice to members. “However, we believe with this advance notice member companies will have sufficient time to implement the newly revised base rates in these territories. Until that time, the relativities and base rates that became effective [Jan. 1] continue to be the approved relativities and base rates for [NCRB] member companies.”