“You know, lately what’s hit our news channels has been the increases in the North Carolina insurance rates.”– THG Insurance Owner and CEO, Chad Huneycutt speaks to some of the causes for a proposed insurance rate increase and how it affects homeowners in coastal North Carolina.
Why and How Insurance Changes
“You know, we’ve seen the last, I’d say three or four years has been the most change that we’ve seen in the marketplace in the last 15 years if I’m honest.
Whether that’s rates or whether that’s underwriting appetites, whether that’s carriers that are no longer in business, we’ve just seen nothing but change. However, one of the things that’s remained constant is that carriers still want more rate. They still want us to pay more for our insurance.
Here in North Carolina, we do have the rate bureau which proposes those rates to the Department of Insurance and then our Commissioner of Insurance decides on what those rate increases are going to be.
I’ve been doing this for over 15 years now, and every year there’s been a recommended insurance increase. Now, they don’t quite get as much as they want. So, which is why they come back year after year and ask for more. One of the main reasons that we’ve seen driving the rates has really been the reinsurance rates. And this is the insurance that an insurance company purchases.”
Global Weather Events and Insurance Rates
“And so those rates are based on global indexes. And so, you think about the wildfires in California, you think about the wildfires that were in Australia. You think about any other catastrophic event that’s taking place around the world that feeds into how much reinsurance costs. So, although our main interest and main focus here in the coastal North Carolina is hurricanes, windstorms, flooding, and that sort of thing, the rate index is based off of a global factor.
And so, we feel that impact, you know, and you think about anything that could have happened even a couple of years ago in Asia that costs the insurance companies billions of dollars. It will finally trickle down and hit our homeowner’s insurance renewals today. So, it’s really a much more complicated format for these insurance companies to figure out what they need to charge you and me for their insurance.
A good example of how things may trickle down for us here in eastern North Carolina are the storms that hit the Gulf Coast. So, if a hurricane comes in and it hits Louisiana or hits Texas or it hits the panhandle of Florida, that may or may not have directly impacted us, but the same insurance carriers that work in those states also work in North Carolina. So ultimately, it affected their bottom line. And so you’re feeling the effects when you get your insurance renewal based on what’s happened around the country.”
Inflation and Reinsurance Rates
“And on top of that, you know, we have the reinsurance rates is a major factor. It’s also just how inflation’s impacted everything. Anyone that built a house in the last few years and maybe had the benefit of building a house five or six years prior to that as well, they saw that the cost of materials almost doubled.
You know, your lumber, your concrete, PVC, anything that has to go into putting the home together, those prices have doubled.”
What About Auto Insurance?
“And nationally, what’s getting a lot of attention right now is the auto insurance, because it cost a lot more to repair your car today than it did ten years ago. And so, a simple $500 bumper fix is now $1100, $1200 dollars.
And that cost is hitting the bottom line for insurance companies, therefore trickling down to your insurance renewal.”
How an Insurance Agency Adapts for You
“For us as insurance agents, even with rates going up, it’s a challenging conversation that we have to have with our clients. No one wants to pay more.
You know, there’s the joke in the industry that insurance is probably that one thing that you have to buy that you hope you never need.
And so, for pricing on things that you hope you never need continues to go up, it can be a tough pill to swallow for a lot of people. But I think the best thing that we offer our clients is giving them that peace of mind that, yes, we understand that we are preparing you for a worst-case scenario.
Unfortunately, our job as insurance agents is to help you think about the unthinkable. You know, what could potentially happen that you don’t even want to consider. But if it did, how would we financially be able to bail you out of that situation, whether it’s a claim on your home, whether it’s an automobile accident, you know, we want to be there for you.
And so, we want to provide that peace of mind. Yes, it has gotten more expensive to do so, but we take a very serious approach to wanting to be able to offer you the very best product that we can.
And if we can get it at the most affordable price, even better. But really our job is to take care of you as the insured.”
Benefits of Using a Local Insurance Agency
“You know, lately what’s hit our news channels has been the increases in the North Carolina insurance rates. For a lot of our clients that we work with here though it’s a second home and you know it’s important for them to, you know, whether they live somewhere else in the state or whether they live in another state, multiple states away, but they own beach property here.
It’s important that anyone that has some sort of exposure here in coastal North Carolina that they’re working with a local agent, because with local agents comes local experience. And it really is very different to insure a home here at Wrightsville Beach for instance, than it would be in Charlotte or Raleigh. The coverages and the things that you need to be aware of and need to be mindful of, they’re a little bit different here at the coast. So, it definitely goes a long way to work with a local agent.”
“We understand that for most people, insurance is very complicated. And it is because at the end of the day you get a 60 to 80 page document in the mail that says you have insurance. Not too many people read that. So, it can be complicated, but we try to remove the complication from the process, at least when we’re meeting with a new homeowner, we try to focus on three main areas to stay focused in and not make it as complicated as it can be.”
- Coverage Amount
“The first being the coverage amount. We want to make sure that your home is properly insured so that if something did happen that we could replace your home at today’s value. So really being able to and we have software in place, but we really want to dial in on what exactly is that amount of coverage that you need to rebuild your home.”
“The second thing that we focus on is your deductible. And there’s no right or wrong answer for this because everyone has different budgets. Some people want a very small deductible, some people are very comfortable having a very large deductible. But we got to have that conversation with the client first.”
- Carrier and Price
“So, once we determine the coverage amount and we’ve determined what deductible is best for your budget, the last thing is which carrier is going to be best for you and what’s that price going to be.
We don’t like to start with price because if we’re trying to put, you know, the price of the insurance into your budget, then we’re going to overlook a lot of things that you really need to have in that insurance policy. So, we like to start with coverage, deductible, and then price.”
THG Insurance is Here for You
“If anything we’ve talked about today prompts questions or things that you just want to know more about, we have a staff of, you know, 25 agents here at THG Insurance, and we’d love to talk with you a little bit more. Answer those questions and provide you with maybe some information and things to think about that you haven’t even thought about yet.
So, we truly do feel like what we offer is peace of mind and service to our insureds. And so that’s what we’re here for.”