North Carolina Home Insurance Rates to Rise 15% by 2026

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North Carolina Home Insurance Rates to Rise 15% by 2026 \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ North Carolina homeowners will see an average 15% increase in insurance premiums by mid-2026 under a settlement between the state Insurance Department and insurers. This compromise, announced by Insurance Commissioner Mike Causey, significantly reduces the Rate Bureau’s original request for a 42.2% hike. Rate increases will vary by location, with coastal areas seeing higher adjustments due to past hurricane damage.

North Carolina Homeowners Insurance Rate Hike: Quick Looks

Statewide Impact: Premiums will rise by 7.5% in June 2025 and another 7.5% in June 2026.
Coastal Increases: Beach areas may face combined hikes of over 30% by 2026.
Rate Bureau’s Original Proposal: A 42.2% statewide increase was sought but rejected.
Regional Variations: Mountain counties will see smaller increases, around 4.5% annually.
Rate Freeze: The settlement prevents further rate hike efforts before mid-2027.

Deep Look

North Carolina homeowners are set to experience a significant shift in their insurance premiums following a settlement agreement between the state Insurance Department and the North Carolina Rate Bureau. This resolution, announced by Insurance Commissioner Mike Causey, outlines an average statewide increase of 15% in homeowners’ insurance premiums by mid-2026. The increases will be phased in over two years, with a 7.5% hike effective June 1, 2025, and another 7.5% increase on June 1, 2026.

The settlement comes as a compromise following the Rate Bureau’s initial request for a 42.2% statewide increase, filed in January 2024. The Rate Bureau, which represents insurance providers, attributed the requested hike to mounting challenges such as inflation, the rising cost of building materials, severe weather-related claims, and soaring reinsurance costs. Commissioner Causey formally rejected this request, citing evidence presented by the Insurance Department that rates should increase minimally or even decrease in some cases. This rejection led to a formal hearing, commencing in October 2024, where evidence, witnesses, and arguments from both sides were evaluated.

Reasons for the Rate Increases

The settlement reflects the insurance industry’s need to adjust premiums in response to ongoing challenges, including:

Inflation in Construction Costs: The rising cost of building materials, driven by global inflation, has increased the expenses insurers face when processing claims.
Severe Weather Events: Hurricanes and storms, such as Hurricane Matthew in 2016 and Hurricane Florence in 2018, have caused extensive damage in parts of North Carolina, driving up claim payouts.
Reinsurance Costs: Insurance companies rely on reinsurance to offset the financial risks of catastrophic events, but the cost of this protection has risen sharply due to more frequent and severe disasters.

Commissioner Causey explained that the settlement ensures insurers have the resources to pay claims while moderating the financial impact on policyholders. “The proposed rate increases are sufficient to make sure that insurance companies, who have paid out large sums due to natural disasters and face increasing reinsurance costs due to national catastrophes, have adequate funds on hand to pay claims,” Causey stated.

Impact by Region

While the average statewide increase will total 15% by 2026, the effects will vary significantly depending on location. Coastal areas and regions hit hardest by hurricanes will see higher increases, while some inland and mountain regions will face more modest adjustments.

Eastern North Carolina: Areas most affected by hurricanes, including counties from Carteret to Brunswick, will see steep increases of 16% in mid-2025 and an additional 15.9% in mid-2026.
Mountain Counties: Regions like Buncombe, Watauga, and Yancey counties will experience lower-than-average increases of 4.4% in 2025 and 4.5% in 2026, reflecting lower risk profiles.
Urban Centers: In Raleigh and Durham, premiums will rise by the average 7.5% annually for the next two years. Homeowners in Charlotte face slightly higher increases of 9.3% in 2025 and 9.2% in 2026.

Broader Implications for Insurers and Homeowners

The North Carolina Rate Bureau justified its original request for a 42.2% hike by highlighting what it called “severely inadequate” premium rates to cover claims. Bureau Chief Operating Officer Jarred Chappell stated that the settlement is “a step in the right direction” but warned that cost pressures remain significant.

“Storms have gotten stronger and more damaging, more people are living in disaster-prone areas, inflation in the construction industry has been particularly high, and reinsurance costs have exploded. All these cost drivers remain an issue,” Chappell noted in a written statement.

To address these challenges, North Carolina has relied on an exception in state law known as “consent-to-rate,” which allows insurers to charge premiums up to 250% of the standard rate for high-risk homeowners. This provision has helped prevent a mass withdrawal of insurers from disaster-prone regions, a trend seen in other states experiencing high claims and escalating risks. In 2022, about 40% of the state’s homeowners’ policies were issued under consent-to-rate agreements, reflecting the industry’s reliance on this mechanism to manage risk exposure.

Future Provisions and Consumer Protections

The settlement includes a provision preventing the Rate Bureau from proposing additional rate hikes before June 1, 2027, offering homeowners some temporary relief. However, the underlying factors driving insurance rate increases—such as climate change, economic pressures, and population growth in high-risk areas—are unlikely to abate.

The agreement highlights the delicate balance between maintaining an affordable insurance market and ensuring insurers have sufficient reserves to remain financially viable. While this settlement moderates the immediate burden on homeowners compared to the initially proposed 42.2% hike, it underscores the ongoing challenges faced by both consumers and the insurance industry in a volatile and evolving market.

Conclusion

The 15% average increase in North Carolina homeowners’ insurance premiums reflects broader trends affecting insurance markets nationwide. Rising construction costs, severe weather patterns, and higher reinsurance rates are reshaping how insurers assess risk and determine premiums. While the phased increases provide a measure of predictability for homeowners, the long-term affordability of property insurance in disaster-prone areas remains a pressing concern.