N.C. Case to Result in $404M Savings, 2.5 Percent Overall Auto Rate Decrease

North Carolina Insurance Commissioner Jim Long has signed an order requiring a 2.5 percent reduction in private passenger auto rates and a 6 percent reduction in motorcycle liability rates, effective May 15.

“I’m proud to announce that this auto rate decrease will save North Carolinians nearly $404 million in potential premiums,” Long said. “After reviewing both sides’ arguments, I couldn’t justify the Rate Bureau’s requested 9.4 percent increase; the data didn’t convince me that rates needed to go up.”

Under state law, the Commissioner sets the maximum allowable rate for auto insurance companies in North Carolina.

The order comes after a lengthy hearing that began in September 2005 and ended last month. As the representative for all private passenger auto insurance companies in the state, the North Carolina Rate Bureau files auto insurance rates with the Department of Insurance every year on Feb. 1. Department rate attorneys and actuaries then review the yearly filings and attempt to come to an agreement with the NCRB on what is a reasonable rate to charge. If no agreement is reached, the case goes to hearing, where Commissioner Long serves as hearing officer. He hears the case and makes a determination as to what rate should be set.

In his 21 years as insurance commissioner, Long has fought to keep auto rates low by negotiating minimal increases or, in most cases, rate decreases. He has saved drivers nearly $4.2 billion in potential premiums resulting in North Carolina having the fifth lowest auto rates in the country.

In 2004, the Department negotiated a zero percent change in rates after the NCRB initially requested a 12.3 percent increase, and in 2003, a 15 percent decrease was agreed upon after an initial request of a 10 percent decrease.

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