N.C. auto insurance rates to drop
Posted September 11, 2008 11:36 a.m. EDT
Updated September 11, 2008 7:41 p.m. EDT
Raleigh, N.C. — State Insurance Commissioner Jim Long signed an order Thursday requiring a 16.1 percent reduction in automobile insurance rates and a 11.7 percent reduction in motorcycle liability rates.
The new rates will go into effect Jan. 1.
“After listening to testimony from both sides during the rate hearings in July and August, I found that the Rate Bureau’s request for a 12.9 percent increase just wasn’t warranted,” Long said in a statement. “It’s the largest increase they’ve requested in almost 15 years. I was surprised by the request, especially since last year the bureau filed for no change.”
Under state law, the insurance commissioner sets the maximum allowable rate that auto insurance companies can charge in North Carolina. The state has the sixth-lowest auto insurance rates in the nation.
During recent hearings, an attorney for the Department of Insurance argued that the market for auto insurance had not changed significantly since last year, when companies did not seek a rate increase.
Experts with the department said the Rate Bureau, which represents insurers, used faulty calculations when determining the proposed rate increase. For example, the bureau filing included claims arising from the North Carolina Reinsurance Facility, an entity that insures riskier drivers, even though bureau rates don't apply to those drivers.
The Rate Bureau can appeal Long order in court and can raise rates while awaiting the the appeals decision. The difference in the ordered rate and the implemented rate must be held in escrow and refunded to policyholders if the bureau loses its appeal.