Officials at the North Carolina Department of Insurance released a notice of hearing in the 2008 auto insurance rate case, in which the insurance industry requested a 13 percent average statewide increase in auto rates. Signed by Commissioner Jim Long Thursday, the notice reflects a hearing start date of June 30.
Department experts reviewed the rate filing, which was submitted on Feb. 1 by the North Carolina Rate Bureau, an independent organization representing all auto insurance companies doing business in the state. Since then, Department representatives have reviewed the filing thoroughly and determined that a rate increase is not justified based on the data submitted. Furthermore, they have identified aspects of the filing that are either incorrect or based on faulty methodology.
Currently, rates set in the annual rate filing are for the traditional market, and exclude rates for the North Carolina Reinsurance Facility, which insures high risk drivers who are charged higher rates. These rates are set in a separate filing approved by the Commissioner. The traditional rate filing submitted to the Department, therefore, should not reflect losses incurred and premiums collected from facility business. This year’s filing, however, includes the losses from the facility – without matching premiums – effectively skewing the data and showing a false need for higher rates overall.
“This year’s request is the largest since 1994, and once again we question the tactics used by the insurance companies in determining this amount,” said Sherri Hubbard, the Department’s lead rate attorney. “Several technical problems with the filing exist, but the issue of including facility losses without showing them offset by Facility premiums is particularly egregious.”
Commissioner Long will decide what rate change, if any, is warranted during the hearing. If the Bureau wishes to appeal his decision, it can do so through the court system, and companies can raise rates while awaiting an appeals decision. The difference in the ordered rate and the implemented rate must be held in escrow. If the Bureau loses its appeal, the escrowed money must be refunded to policyholders who paid too much.
Source: North Carolina Department of Insurance
Topics Auto North Carolina
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