Auto insurance proposals raise commissioner's ire

Posted April 11, 2011 1:48 p.m. EDT
Updated April 12, 2011 1:17 p.m. EDT

— State Insurance Commissioner Wayne Goodwin on Monday came out against three proposals to do away with North Carolina’s system for setting auto insurance rates, saying consumers would suffer.

Senate Bill 490 would strip Goodwin's authority to set a cap on auto insurance rates and to determine if rates are excessive. He said the bill also would allow insurance companies to raise rates with no prior approval from the state Department of Insurance and allow them to charge drivers more, regardless of their driving records.

Two companion bills – House Bill 834 and Senate Bill 477 – also would allow higher rates for "clean risk" drivers, he said.

"The insurance companies call it auto rate modernization. Well, if making rates skyrocket is modern, then you can just call me old-fashioned," Goodwin said at a news conference.

Sen. Bob Rucho, R-Mecklenburg, said Senate Bill 490 is an attempt to modernize an antiquated system that allows drivers to benefit from competition between the insurance companies. He said his bill would reward good drivers, and only bad drivers might see rate increases.

The sponsors of the other two bills couldn't be reached Monday for comment.

Nationwide Insurance issued a statement Tuesday, urging caution in any changes to North Carolina's system.

"Nationwide believes the rate system in North Carolina works well and that there is simply no crisis to address," the company said in the statement. "Any dramatic dismantling of our current auto insurance ratemaking system should be considered with great caution to assure that customers benefit and do not suffer unintended negative consequences."

North Carolina has the lowest auto insurance rates in the Southeast and the eighth-lowest rates nationwide, Goodwin said. The DOI hasn't approved an auto rate increase in more than 15 years, and last year, he ordered Allstate to issue refunds after determining that the insurer had overcharged policyholders.

The ability to order refunds also would be stripped from the DOI under the proposals, Goodwin said.

“(The bills) are pushed by out-of-state insurance companies who want to make dramatic changes to our state’s insurance system – a system that, quite frankly, is working fine," he said. "The bottom line here is this, insurance companies want more of your money. These proposals will no doubt lead to higher car insurance rates."