Agents, Insureds Said Surprised by Nationwide’s 10,000 Nonrenewals in NC

September 29, 2023 by

In February, Nationwide Mutual Insurance filed notice with the North Carolina Department of Insurance that it would non-renew some 10,525 homeowner policies in the state due in large part to the growing risk from climate change and hurricanes.

The move was in line with Nationwide and other national carriers’ plans to reduce exposure, including losses from costly natural disasters – such as wildfires and floods in California and storms in Florida and other coastal states.

“Strong headwinds brought on by the economic environment, catastrophe weather events, and the impact of inflation continue to impact the entire insurance industry,” Nationwide said in a statement in June.

But in North Carolina, some insurance agents and insureds apparently didn’t get the word and were surprised when nonrenewal notices landed in their mailboxes in recent weeks, according to local news reports. The Virginian-Pilot newspaper on Friday quoted one agent on the state’s Outer Banks as saying that his agency was caught off-guard by the nonrenewals, which he now understands are part of Nationwide’s plan to exit as many as 100,000 policies around the country.

The pullback has forced some agents and brokers to scramble to find new coverage for homeowners. And insureds are facing much higher premiums in many cases, according to the newspaper and a local TV news report.

A spokesman for the North Carolina Department of Insurance said Nationwide had followed regulations. After the filing in February, the insurer gave 30-day notice to insureds and agents, as required by law.

“It apparently just sat there in the ecosystem and did not get noticed,” said Jason Tyson, communications director for NCDOI.

The 10,525 nonrenewals represent 4.4% of Nationwide’s total personal lines policies in force in the state and about 1.7% of its personal lines policies across the country, Tyson said. About 5,800 of the North Carolina policies were nonrenewed based on Nationwide’s hurricane hazard assessments system. Another 4,700 have been referred to the North Carolina Joint Underwriting Association, an insurance pool commonly known as the Beach plan.

The highest number of nonrenewals were in Pitt County, home to Greenville, near the coast; in Wayne County, about 30 miles inland from Pitt; and in Dare County, home to the storied and windswept Outer Banks and the Kitty Hawk and Nags Head communities.

Nationwide said in a statement last week that the carrier is being more selective about where it writes and its overall risk.

“Like everyone else in our industry, we are taking the necessary actions that ensure long-term viability and allow us to offer protection at a competitive price to customers across all our business lines who represent many types of needs,” the statement notes. “These are tough decisions, but the right decisions that will enable us to be here long term for our customers.”

Consideration was given to climate severity, weather-related losses, and the reinsurance market. Consequently, underwriting renewal guidelines were refined, and specific actions were necessary for a small percentage of the company’s business, Nationwide told DOI.

Florida, California and Louisiana have garnered most of the headlines from property insurers nonrenewing, suspending new business, limiting coverage or becoming insolvent in recent years. In one county in California, San Bernadino, for example, nonrenewals increased by more than 770% from 2015 to 2021, long before the recent pullbacks by major carriers, First Street Foundation said in a webinar Friday. Two parishes in Louisiana have seen nonrenewals and rate increases of more than 70% in recent years.

But North Carolina has also been hit by losses from convective storms and rising seas. News outlets have reported about beach homes on the Outer Banks that have been washed into the sea in recent months. Nationwide, in fact, has not written any new policies on the Outer Banks for a decade or so, DOI’s Tyson said and a local agent told the Virginia newspaper.

Despite the surprise for some Carolinians about the Nationwide nonrenewals, homeowners should be able to find new coverage, Tyson said.

“North Carolina has a viable homeowners insurance market, coverage is available and the Beach Plan is robust,” he said. “If agents have not already contacted their policyholders, policyholders should reach out to their agent to secure replacement coverage.”

Photo: Elizabeth Newman picks up debris in Kill Devil Hills, North Carolina, after a hurricane in 2003. (AP Photo/Bob Jordan, File)