NC Auto Rates to Drop 16%?

Last week, North Carolina Insurance Commissioner Jim Long signed an order requiring a 16.1 percent percent decrease in auto rates and an 11.7 percent decrease in motorcyle liability rates. This was a complete turnaround considering the state’s rate bureau had requested a 12.9 percent increase in auto rates for NC drivers. Long and the rest of the insurance department felt the request to raise rates was completely unwarranted since the market for auto insurance has not changed significantly in the past year.

State experts claim that the rate bureau used inaccurate calculations to determine the proposed increase. For example, claims for “at risk” drivers were included in the calculations even though bureau rates do not apply to these drivers.  The state’s reinsurance facility files separate rate proposals for these types of drivers. Commissioner Long agreed with department experts that the bureau’s calculations painted a deceiving picture of the need for a rate increase.

The rate bureau can choose to appeal Long’s order, and insurance companies can choose to temporality raise rates while waiting for the court’s decision of the appeal.  These companies will, however, be required to hold any funds collected from the rate increase in escrow.  In the event that the bureau loses the appeal, the insurance companies will be  required to return the escrowed funds (plus interest) to policyholders.