Hearing set on issue of proposed 13 NC auto insurance rate increase

Department of Insurance (NCDOI) experts and insurance industry officials will come together Monday to argue their respective sides regarding an increase in auto insurance rates.

The auto insurance industry, represented by the North Carolina Rate Bureau, asked for a 13 percent average statewide increase in a filing to the Department last February. The NCDOI says it believes the increase to be "excessive and unjustifiable." The NCDOI will argue that the market for auto insurance has not changed significantly since last year, when companies did not seek a rate change and instead agreed to keep rates the same.

Insurance Commissioner Jim Long, who by law must remain unbiased and open to arguments from both sides, will preside over the hearing, which begins at 10 a.m. Monday, June 30, and is expected to run four to six weeks.

Rate experts with the NCDOI say the Rate Bureau employed "faulty calculations" when determining the proposed rate increase. For example, the Bureau filing included claims arising from the North Carolina Reinsurance Facility — an entity which insures riskier drivers — even though Bureau rates do not apply to those drivers. In fact, the Reinsurance Facility files a separate rate proposals using its own claims data. NCDOI officials will argue that the Bureau filing presents a skewed picture of the marketplace and the filing should only include claims data for drivers not covered by the Reinsurance Facility.

Commissioner Long's task is to decide what rate change, if any, is warranted. If the Bureau wants to appeal his decision, it can do so through the court system, and companies can raise rates while awaiting an appeals decision. The difference in the ordered rate and the implemented rate must be held in escrow. If the Bureau loses its appeal, the escrowed money must be refunded to policyholders who paid too much.

North Carolina currently has the 6th lowest auto insurance rates in the nation.

http://www.wbt.com/news/details.cfm?article_id=37780

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Hearing set on issue of proposed 13 NC auto insurance rate increase