Local Politics

Debate Over Who Controls Insurance Rates Continues

Posted January 16, 2008

— A legislative committee Wednesday heard arguments for and against a proposal that would give auto insurance companies more control over the rates they charge consumers.

The industry wants a free-market system that would take control of the rates away from North Carolina's commissioner of insurance, who is elected.

Senate Bill 901, which calls for an impartial panel to set rates, was pulled from the Legislature last May so that lawmakers could further study it.

The Joint Legislative Study Committee on Automobile Insurance Modernization decided Wednesday that it needs more information about the matter.

Commissioner of Insurance Jim Long said he thinks the current system is working for all parties involved.

North Carolina drivers have the sixth-lowest insurance rates in the nation, and insurance companies are making a profit, Long said.

"We've got companies coming in every year to write auto insurance business in North Carolina. They're making a profit – they're making a healthy profit. We want them to make a profit," Long said.

Long and others fear premiums could increase if insurers get more control.

"In a captive market, where consumers have no choice but to buy auto insurance, there has to be a third-party regulator to ensure customers don't get ripped off," Consumer advocate Rob Thompson, with the North Carolina Public Interest Research Group, said.

Insurance companies have contended that Long's political power puts them at a disadvantage.

Historically, they typically ask for much higher rates than they get, and when they appeal the rates enforced by the Department of Insurance in court, Long almost always wins.

Insurers also point to fairness for bad and risky motorists.

"The point is the rates need to be right for everyone," said Joe Stewart, executive director of the Insurance Federation of North Carolina. "If you are a good risk, you deserve a great rate, and you shouldn't subsidize someone else's accidents."


This story is closed for comments.

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  • OOOFFFF Jan 18, 2008

    Down with JiM!

  • NC4Now Jan 17, 2008

    happy - no arguments here. In fact, you would be the type of driver to benefit the most from competitive rating. I would like to see the state allow competitive rating so people would end up paying what they truly should pay, but as you say, there are other departments / issues which are more pressing ...

  • happy Jan 17, 2008

    I'm not arguing with you there NC4Now - I'm just thinking that there are so many other areas of the state government that have gone array and this one seems to be somewhat in check. I'd rather they overhaul a different department/issue and leave this as is.

  • wbearp Jan 17, 2008

    The Insurance industry and the Oil companies are doing nothing more than raping the american public! Our government is allowing it, and there is nothing Joe Q. Public can do about it. I think Mr. Long has done a fair job trying to regulate things, but let's be honest. How much money do they give to Jim and every other politician for campaign contributions? Government sanctioned extortion is all it is. If you see a guy riding a horse on the Beltline, wave because it will just be me, ol' Wyatt Earp just trying to get to work. And I know one other thing...green lizards can't talk!

  • NC4Now Jan 17, 2008

    happy - I'm glad you don't have a problem with your insurance rates.
    Personally, if I was hypothetically charged $76 per month, but with competitive rating I would only have to pay say $66 per month, I would prefer the $66 and annual savings of $120. It's not a huge difference, but I could always use the extra money myself.

  • happy Jan 17, 2008

    NC4Now - I have an excellent driving history. No points, no tickets, long term renewals with my insurance co, multiple lines, etc.

    I have a relatively new SUV (2003). My rates for full coverage and not skimping on the limits is only $76 a month. I do not consider that excessive, especially knowing that if I do have even a minor fender bender, insurance is going to have to pay out at least a couple grand.

  • NC4Now Jan 17, 2008

    As someone with 10 years of auto insuance work experience in MA and years of experience down here as well, open competition of rates would result in (1) lower rates for "good/great drivers", and (2) much higher rates for "bad risks" or "bad drivers". Right now good/great drivers are paying more than they would if companies could set their own rates. The insurance department is "forcing" insurance companies NOT to charge high rates for bad risks, and the good drives are paying some extra premium to pay for it.
    Basically, right now, good drivers pay more than they should so that bad drivers don't have to pay as much as they should.
    As long as one believes that this is a fair system, we shouldn't let the insurance companies set their own rates.

  • elmowantbeer Jan 17, 2008


    The DMV has control over insurance via license plate registration -- no insurance, no valid plate! And as soon as you cancel liability insurance, your insurance carrier is required to notify the DMV and your registration is automatically revoked, meaning that if a police officer runs your plate for anything that it will come up. NC does not have a problem with uninsured motorists like other states do. I checked my bill today, and my "uninsured motorist" coverage for two cars is only $65 every six months. When I lived in Pennsylvania, that same coverage was over $300 a year.

  • ratherbnnc Jan 17, 2008

    Maybe we should do like Florida Insurance Commissioner just did..Suspend Allstates ability to write any more auto insurance policies in the State of Florida. Wish Jim Long would or could do the same. Keep the legislature out of it!

  • cuteboyd Jan 17, 2008

    My rates are reasonable due to the fact that I try to do the right thing by not getting any tickets. My car insurance seems to be the only thing that's not increasing constantly out of my control. Please let it stay affordable. It's hard enough not making any money being a state employee.