N.C. Schedules June Auto Insurance Rate Hearing

North Carolina Insurance Commissioner Jim Long has announced a hearing on auto insurance rates will be held in Raleigh in June and recently requested rate increases will be denied until after the hearings.

This announcement comes after the North Carolina Rate Bureau, an independent organization that represents all auto insurance companies in the state, filed for a 6.7 percent increase in rates on Feb. 1. However, the Bureau recently has informed the department about a data error that will revise their initial request to a 7.6 percent overall increase.

Department officials reviewed the rate filing and determined that the requested increase was not justified. State law requires commissioner Long to serve as hearing officer during a hearing to decide the matter. Auto rate hearings typically encompass three to four weeks of testimony from both sides; however, 2005’s hearings lasted more than four months.

“This filing came on the heels of the 2005 settlement where commissioner Long ordered an overall decrease in auto rates,” Sherri Hubbard, the department’s lead rate attorney on this case said. “So why now, only a month later, do North Carolinians need an increase after years of low rates from financially sound companies?”

Last month, Long ordered a 2.5 percent overall decrease in auto rates when the Bureau requested a 9.6 percent increase, and in 2004, the department negotiated a zero percent change in rates instead of the requested 12.3 percent increase.

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.

In 2004, the resolution of two such appealed cases resulted in an auto rate refund worth several hundred million dollars. In October and November 2004, North Carolina drivers received refund checks, often for hundreds of dollars. The two cases were from 2001 and 2002; the 2001 case was decided in North Carolina Supreme Court, which ruled in Long’s favor. The 2002 case was settled out of court quickly after that.

In 20 years as insurance commissioner, Long has kept auto rates low by negotiating minimal increases or, in most cases, rate decreases. He has saved drivers as much as $4.2 billion in potential premiums resulting in North Carolina having the fifth lowest auto rates in the country.

Topics Auto North Carolina