Insurers Divided Over North Carolina Auto System

North Carolina legislators are once again examining the state’s car insurance rate-setting system as insurers themselves remain divided over whether changes are a good idea.

Legislative proposals floated in 2011 could have lowered rates for bad drivers in the high-risk pool but opponents said those bills would have raised rates on others with good driving records.

“I don’t think you have a clear consensus among the industry that they want change,” said David Marlett, a professor and insurance expert at Appalachian State University.

According to a group led by State Farm, along with Geico, Progressive and trade associations seeking a system overhaul, insurers are hamstrung in pricing because all auto insurers must file one combined annual rate plan together through the North Carolina Rate Bureau. The state insurance commissioner can approve or change those rates. The coalition supported legislation that would have given insurers more leeway to change rates by up to 15 percent without the commissioner’s consent. “It’s an antiquated system that was used way long ago and no longer has a purpose in today’s marketplace,” said Liz Reynolds with the National Association of Mutual Insurance Companies, a member of the Fair Automobile Rates for North Carolina coalition.

Nationwide Insurance, which has the biggest market share in the state, along with North Carolina Farm Bureau Insurance at No. 3, and others, disagree and aren’t in the coalition. Nationwide says the rate-filing mechanism promotes stability. Depending on who’s calculating, North Carolina’s average premium rates rank 7th or 8th lowest in the country. “North Carolina has a system that is fair and competitive. There is no reason to dismantle it,” Nationwide spokesman Eric Hardgrove said.

Commissioner Wayne Goodwin opposed the 2011 bills.

Topics Carriers Auto North Carolina