WRAL Investigates

New law cracks down on trucking companies faking NC HQs

Posted July 15, 2016 6:17 p.m. EDT
Updated July 15, 2016 6:43 p.m. EDT

— After WRAL Investigates uncovered out-of-state transportation companies claiming in-state residency to obtain lower insurance rates, the state insurance commissioner and lawmakers responded. House Bill 287, passed at the end of the recent legislative session, includes a series of insurance reforms. Insurance Commissioner Wayne Goodwin pointed to one tenet of the law he says will reduce fraud and save millions for legitimate businesses based in North Carolina.

When out-of-state drivers started getting North Carolina license plates a decade ago to leach off our state's lower insurance rates, legislators outlawed the practice. That didn't stop some commercial truckers from doing the same thing, posing as in-state businesses.

"We have tackled that, and now that is fraud," Goodwin said.

He lobbied lawmakers to tighten requirements to better ensure that businesses that claim to be in North Carolina really are.

"Somebody can't just file corporation papers with the secretary of state," Goodwin said. "That is insufficient."

The law was prompted in part by a WRAL Investigates report in March that showed Senn Freight Lines in Newberry, S.C., was paying North Carolina insurance rates.

A spokesman for Senn admitted that the trucker has no North Carolina operations.

Another example is Fast Transport Inc. According to the secretary of state's office, Fast Track is a North Carolina-registered corporation, yet their remote residential Wake Forest address shows no signage or trucks. A Fast Transport spokesman said that location is the accounting office for a company with out-of-state trucks.

In recent years, the NC Reinsurance Facility, which offers last-ditch coverage to high-risk companies, hiked its commercial rates because of significant claim losses, many out-of-tate.

"It impacts the rest of us and what we pay in our premiums," Goodwin explained.

The new law takes effect Dec. 1. Companies will have to do more to prove legitimate presence in North Carolina and will ace consequences if they lie.

"It is unfair, and now it's considered fraudulent for an out-of-state company that is unlawfully declaring that it has a presence here to take advantage of North Carolina," Goodwin said.

The reforms also include more rate transparency requirements for insurers, a higher cost threshold for repairs that lead to rate hikes and a cap on long-term care insurance premium hikes.