A 1.4 perent rate hike requested by North Carolina auto insurance companies is being contested by state officials.
Insurance department actuaries have concluded that the increase is not warranted in part because it incorporates certain reinsurance costs.
Insurance Commissioner Wayne Goodwin called for a hearing on Aug. 3 to review the request that was submitted on Jan. 30 by the North Carolina Rate Bureau on behalf of insurers.
The 1.4 percent increase request is based on the interim 9.4 percent rate increase being charged by the industry during its appeal of a 2008 auto rate order. The filing also includes data from the reinsurance facility that department experts believe shouldn’t be included because the facility files separate rate requests with its own data. Department officials said its inclusion is essentially “double-dipping” to heighten the need for rate increases.
“This year’s request comes not long after the Rate Bureau’s decision to appeal the 2008 auto rate order,” said Sherri Hubbard, the Department’s lead rate attorney. “Last year, former Commissioner Jim Long ordered a 16.1 percent decrease, which the industry is currently appealing through the court system. We don’t think an increase is warranted at this time, and we have some serious questions once again about the data included in the filing.”
During the hearing, Goodwin will listen to testimony from experts on both sides and decide what rate change, if any, is warranted. If the industry wishes to appeal his decision, 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 the industry loses its appeal, the escrowed money must be refunded to policyholders.
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