Goodwin issues pre-emptive strike against auto insurance rate proposal
Posted June 5, 2014
Updated June 6, 2014
Raleigh, N.C. — Insurance Commissioner Wayne Goodwin came out Thursday against an attempt to resurrect a change to North Carolina's auto insurance rate structure that lawmakers killed last year.
The proposal, which the Department of Insurance said could be heard in the General Assembly as early as next week, would dismantle the North Carolina Rate Bureau, which negotiates rates for insurers with the state and sets the maximum allowable rates. Under the proposal, which technically doesn't exist yet but has been shared with lawmakers in recent weeks, insurers would be allowed to opt out of the Rate Bureau and set rates beyond the cap.
The House Insurance Committee defeated a similar proposal backed by large insurers such as State Farm and Geico in April 2013.
Insurers said then that the Rate Bureau prevents companies from offering various discounts and noted that they would have an incentive to keep rates low in order to compete.
Goodwin said Thursday that more than 2,000 discounts already are available in North Carolina, and he urged public opposition to what has been dubbed the "Good Driver Discount Bill."
"If this proposal passes, I am certain that car insurance rates will go up, even for good drivers," he said in a statement. "Despite what profit-driven insurance companies will tell you, I will have little to no authority to stop rates from going through the roof."
North Carolina has the sixth-lowest average auto insurance rates in the country, he said, and more than 150 companies offer auto policies in the state.
"The insurance companies don’t need a change in law to charge you less. The only reason they need a change in law is to charge you more," he said. "This bill has nothing to do with helping drivers. It has everything to do with insurance companies’ bottom line."
Oyango Snell of the Property Casualty Insurers Association of America responded by saying the proposal is "simply a common-sense approach to allow more good drivers in North Carolina an opportunity to save money on insurance."
Goodwin would still be able to control rates but wouldn't have to deal with the Rate Bureau, Snell said.
"The discount programs and products that many North Carolina consumers desire are not available because of the antiquated rate-making regime," said in a statement, adding that reforming the existing system would allow insurers to forgive tickets and accidents that they can't under the state's mandatory points system.