Hello and welcome. This is Nolan Formalarie with Nolan’s News and Discover NC Homes. I have Kara Herring with us today from Don Bullard Insurance (https://www.donbullard.com/). Kara is the president and they’re located both in Southport and Wilmington.

Kara, thank you for being with us. Today I wanted to talk to you about insurance increases. Across the board, doesn’t matter what company, who you’re with, personally I’ve seen 20 to 30% increases. So has everyone else and sometimes a lot more than that.

You guys have always been wonderful. I hold all my insurance with Don Bullard. I recommend you guys to everybody. But what is going on in the industry? Why have we seen these increases, specifically in 2021, even compared to 2020, that’s where this increase has happened. So what does it due to?

Well, we have had increases pretty much year after year. I think everybody’s come to expect that. It depends on the company, but yes, this year, pretty much across the board, every company has seen what I would say, and you would say as well, a significant increase.

Basically it’s the result of numerous years of storms. We had, starting in 2016, we had Matthew, 2018 was the biggie, with Florence. And then, we even had one last year, Isaias. But Florence probably was the killer. What has happened, I guess the bulk of it is the cost of re-insurance for the insurance companies.

What is reinsurance?

Reinsurance is the insurance that the insurance companies have in order to cover themselves in a greater than expected year of losses.

I got it. SO the insurance companies are also insured.

Right. Exactly. And then what happens is if their insurance goes up, obviously in order for them to still be profitable and continue to do business, especially in the coastal area, they have to pass that down to the individual policy holders.

So that’s what’s happening, re-insurance companies are renegotiating their contracts and maybe even canceling their contracts with the insurance companies. So what companies are doing is maybe they’re limiting their risks. So maybe you, you likely may see a non-renewal. And you may get one and your neighbor may not, from the same company. I don’t know that there’s any rhyme or reason to that, they’ve got their figures.

There are companies that they’re non renewing – a small percentage. There are companies that are totally leaving the state of North Carolina. And other things that the insurance companies are looking to do, obviously they’re adding rate in order to still be able to do business. Some companies are kind of pausing, kind of like a hiring freeze:”We’re gonna pause in this particular area and not write any more business for a period of time.”And they’re doing all of these things – maybe their underwriting guidelines, to get stricter. So they’re stricter on their roofs or age of home or proximity to water.

So different things, but they do this in order to stay in the business, in the marketplace, for the long term.

That makes sense. And just one question too, before you leave: have you seen, or, I know you’ve been in the industry for a number of years, if we go through a few years without having any storm do the rates come back down?

Sure, they can, absolutely. You could have new companies come in and that happens all the time! So if we go through a period – we need a really calm period, I mean I need a calm period for a while, we all do, but, it’s kind of the cost of living in paradise. We live in a beautiful place, we’re right here at the beach, all this water around us, but there’s a lot of risks to that.

We think it’s bad insurance-wise, dollar-wise in North Carolina… In California they’ve got wildfires and earthquakes and it’s awful out there. Florida is tough too.

So while our rates are going up, look at the value of the homes as well. You may also be seeing an increase because of COVID costs of labor and materials and the disruption in the supply chain that has caused building costs to go up. I don’t know what it costs now per square foot to build, but I would venture to say, it’s in the $200. Last year maybe you were telling somebody it’s $150 a square foot to build, and now maybe it’s $200-$225.

So just make sure you’re checking your policy, especially as we go into hurricane season, is that number to replace my home still a good number with everything that’s going on in building materials and that sort of thing right now.

Okay. Thank you! I appreciate it, Kara. Good information! I appreciate it. Thank you for coming.

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About Nolan Formalarie

Nolan Formalarie has been in the North Carolina Real Estate Industry for over 8 years and enjoys every minute of it. He is involved in every aspect of the industry including selling and purchasing residential property, home watch services, property management, association management and construction.