The affordability and availability of property coverage is a central issue in the race for North Carolina insurance commissioner.

State Sen. Natasha Marcus, a Democrat, is seeking to unseat two-term incumbent Republican Mike Causey, whose time in office has seen both intrigue and controversy.

Top of the election's agenda is homeowners insurance. Rates in North Carolina are rising at rates once limited to disaster-prone states like California and Florida and both candidates are trying to convince voters they have the solution.

Rate bureau in the spotlight

Unlike most US states, individual insurers do not file rate requests directly to the Tarheel State's regulator. Instead, a separate body called the North Carolina Rate Bureau asks for one collective rate increase on behalf of the industry, though individual insurers can file deviations from approved in-force rates.

If the regulator disagrees with an NCRB request, the commissioner then holds a public hearing, at which point the regulator can deem the rate request excessive and disapprove. The regulator then chooses to either privately negotiate rates with the NCRB or take the bureau to court.

Marcus and Causey agree that centralized rate filing is the best way to process rate increase requests. The challenger, however, in an interview claimed Causey has misused the system and is not obtaining the best rate for consumers, especially when it comes to homeowners insurance.

"Why are insurance companies making so much profit on North Carolinians when they're losing money in other states?" Marcus, a former litigation attorney, said. "Particularly for people on the coast here in North Carolina, they are paying crazy high rates and there's just no transparency about it."

Marcus said Causey has allowed numerous rate hikes during his tenure with "zero public hearings."

Causey pushed back, saying in an interview that a public hearing was held in January over a rate filing request. According to news reports, Causey was not present during those proceedings. The request, which sought to raise rates about 42% on average across the state, received significant opposition from the public.

The commissioner later released a statement explaining that he was not at the public comment forum to avoid accusations from the NCRB of "prejudging a rate request before notice of a hearing may be issued." Causey then rejected the request and set a hearing for Oct. 7.

Controversies, allegations

While most insurance commissioner races receive little media coverage, North Carolina's has garnered significant attention due to various scandals that have occurred during Causey's tenure.

The incumbent has been under scrutiny following late 2023 and early 2024 media-reported allegations of improperly awarding jobs to political allies and personal friends.

Marcus has also accused Causey of taking campaign donations from insurers and giving them beneficial rates after private meetings. Causey called those allegations "hogwash" and "sour grapes."

The commissioner said he does not handle campaign donations, though he did acknowledge receiving some political action committee (PAC) donations from insurance companies and individual insurance agents' personal accounts. PACs associated with the Blue Cross Blue Shield of North Carolina and Allstate are listed among Causey's top campaign funders. Marcus does not have any insurance PACs listed among her top donors.

Causey also clashed with the GOP-led state legislature during his second term, which stripped him of his title of state fire marshal.

Coastal concerns

Property insurers in North Carolina have performed better than the industry as a whole across the US. For example, North Carolina property underwriters had a direct incurred loss ratio in 2023 of 57.8%, better than the total US industry average of 70.5%. North Carolina insurers also performed better than the wider industry in 2022 and 2021.

Across the country, poor underwriting results have pushed US homeowners insurers to raise rates. According to an S&P Global Market Intelligence analysis, the nationwide calculated weighted average premium rate increase for owner-occupied homeowners insurance In 2023 was 11.3%, and 25 states saw a rate change of at least 10%.

North Carolina's FAIR plan, the state's market of last resort, as well as under the Coastal Property Insurance Pool (CPIP), formerly known as the Beach Plan, have both expanded.

According to industry filings, the FAIR plan brought in $208.5 million in premiums in 2023, an increase from $155.1 million in 2022. The FAIR plan policy count stood at roughly 273,000 policies at the end of 2023, up from about 150,000 on Dec. 31, 2015.

When a state insurer of last resort significantly increases its policy count, it generally indicates that private companies are withdrawing from the market.

The CPIP has also seen premiums increase significantly over the years, growing to $598.5 million at the end of 2023, up from $456.1 million at the close of 2022.

Candidate priorities

When asked what would be on the top of his docket if re-elected, Causey emphasized fighting fraud, particularly in healthcare.

"We've seen that by being aggressive in fighting insurance fraud, that is a deterrent," Causey said. "It also helps us hold down our insurance costs."

Causey previously worked with the FBI and wore a wire in early 2018, which helped convict Greg Lindberg, a major Republican donor and insurance magnate, of political bribery. Lindberg, who owned Global Bankers Insurance Group LLC, appealed his conviction but a federal appellate court upheld the $524 million judgment against him in August.

Causey also said that he wants to focus on strengthening state building codes in an effort to bring insurance costs down.

Marcus agreed that building codes are "woefully inadequate" and need to be fixed. Her top priority, however, is on transparency, accountability and advocacy.

"[Causey] allows the insurance companies to collectively raise their rates time and time again … and does that without any transparency," Marcus said.

An August poll showed an extremely tight race with Causey leading Marcus by a single percentage point, well within the margin of error.