RALEIGH, N.C. — North Carolina Insurance Commissioner Jim Long on Thursday announced a settlement in the 2003 auto insurance rate case that could save consumers nearly $500 million in premiums from current rates.
The agreement, reached between the Department of Insurance and the North Carolina Rate Bureau, represents only the third time in Long's 18 years as insurance commissioner that the two entities have settled.
To date, Long has saved North Carolina drivers a whopping $3.2 billion through tough and decisive negotiations with the Rate Bureau, an independent organization that represents the state's property and casualty insurers.
The 2003 settlement resulted from a rate file submitted by the NCRB on Jan. 31, requesting a 10 percent reduction in private passenger liability rates.
This is only the third time since 1984 that the Bureau has sought a reduction. Backed by data from the Department's experts, however, Long determined that the reduction was not sufficient and asked for more.
The agreed-upon 15 percent rollback comes less than a year after Long ordered a 17.8 percent decrease in 2002.
"After several years of telling the Bureau that they are charging too much, I'm happy to see that they are beginning to listen to me!" Long said. "North Carolina drivers should not have to pay higher premiums than necessary, and the rate making process can be long and drawn out.
"I am pleased that we were able to reach an agreement this year so consumers can begin seeing savings soon."
The settled rates will go into effect July 1.
Two rate cases from previous years are still pending appeal. In 2001, the NCRB's request for a 10.6 percent increase was met with staunch resistance by Long; he ordered a 13-percent reduction.
Similarly, in 2002, the Bureau sought a 5.9-percent increase and instead was ordered to decrease rates by 17.8 percent.
As both parties await the appeals process, North Carolina law allows insurance companies to implement the higher rates. The difference in the implemented rate and the ordered rate must be held in escrow, and if the appeal is denied, that money plus interest must be refunded to customers.
A 2000 North Carolina Supreme Court decision in Long's favor resulted in the refund of more than $250 million plus 11.5 percent interest to North Carolina drivers.
The rate-making process requires the Rate Bureau to file proposed rates with the Department annually. These rates represent the maximum a company can charge.
If the department and the NCRB cannot reach an agreement, public hearings are held. These hearings typically run five to six weeks, with thousands of pages of transcripts.
"My staff and I work tirelessly to protect North Carolina drivers from unreasonable rates, and we will continue to do whatever it takes to make sure our citizens don't pay too much," Long said. "It is a relief, however, to know that our summer won't be spent in a hearing room this year. I thank the Bureau and its member companies for their reasonableness in reaching this agreement."