This week begins the first phase of a process that will see about 1 million North Carolina policyholders begin to receive refund checks from their auto insurance companies totaling more than $50 million.
The refund distribution is a result of the 2009 auto rate settlement with the insurers’ rating bureau, the North Carolina Rate Bureau (NCRB), that Commissioner Wayne Goodwin signed last July.
“These refund checks represent instances where North Carolina drivers were paying too much for their auto insurance, and I’m glad that these extra premium dollars plus interest will go back into their wallets,” said Goodwin.
The refund distribution will occur in two different waves, the first starting this week and the second starting on Nov. 1.
Refund checks will be mailed to eligible policyholders. According to the settlement language, companies writing only six-month policies and companies writing both six-month and 12-month policies that expire prior to May 1, 2010, should send out refunds May 1 – July 31, 2010. All other refunds should be sent Nov. 1, 2010 to Jan. 31, 2011.
The checks are the result of a dispute between the Department of Insurance and the rate bureau over rates ordered in 2008. During the appeals process, the NCRB implemented an interim 9.4 percent rate increase that went into effect on Jan.1, 2009. In cases where insurance companies charged policyholders more than the rates determined by the 2009 settlement, insurance companies are required by statute to refund the difference between the rates charged and the settled rates, with interest.
The 2009 auto settlement did away with the NCRB’s implemented 9.4 percent 2008 rate increase and denied their 2009 request for an additional 1.4 percent rate increase and included an additional 0.5 percent decrease. Under the settlement, the NCRB may not file changes to auto rates until 2011, which means that the maximum allowable auto rates are locked in until Oct. 1, 2011 at the earliest.
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