The North Carolina Rate Bureau’s request for an auto rate hike of 13.8 percent is not justified based on the data submitted, according to a statement from the North Carolina Department of Insurance.
The decision, made by Commissioner Mike Causey and NCDOI officials, came on March 24 after “thorough” review of NCRB’s 1,500-page filing submitted on Feb. 1. NCRB is an independent organization representing all auto insurance companies doing business in the state.
Instead, NCDOI has released a notice of hearing for NCRB’s 2017 auto insurance request for a 13.8 percent average statewide increase in auto rates.
The hearing is the next step in the process where a hearing officer will listen to testimony from experts on both sides of the issue and decide what rate change, if any, is warranted.
The hearing has been scheduled to begin Sept. 11, 2017, at 10:00 a.m. at the NCDOI in Raleigh.
If NCRB wishes to appeal the decision rendered after the hearing, it can do so through the court system, and companies can raise rates while awaiting a decision from the courts. The difference in the ordered rate and the implemented rate must be held in escrow.
If NCRB loses its appeal, the escrowed money must be refunded to policyholders who paid too much.
Joanna Biliouris, chief operating officer for NCRB, said NCDOI’s decision was not surprising, but the rating organization believes the rates are justified.
“We are fully prepared to go to the hearing and present the case as best we can,” she said.
NCRB said in February that the rate increases were necessary because of a “dramatic increase in [auto] losses and the cost of those losses since 2014.”
“While the increase in losses has been a nationwide phenomenon, current data from the North Carolina Division of Motor Vehicles is particularly troubling,” NCRB said. “In 2015, the most recent year available, fatalities increased 8.1 percent from 2014, injuries increased 11.8 percent and reported crashes were up 11.1 percent.”
NCRB said the increase in losses is the result of a number of factors, but the most significant is the rise in the number of miles driven each year. In North Carolina, mileage driven in 2015 was up 13 percent from the average of the preceding five years. In addition, inflation in 2016 has increased vehicle repair costs by 2.4 percent and total medical care costs by 3.8 percent.
Two other factors more difficult to quantify, NCRB said, are impaired drivers and distracted drivers. The NCDMV estimates, for example, that in North Carolina, there were 7 percent more crashes in 2015 due to distracted driving and 13.2 percent more alcohol-related crashes.