The article doesn’t tell the whole story. It has a slant toward abolishing the current property and casualty system.
The North Carolina Rate Bureau is an association of all property and liability carrier admitted in North Carolina. Admitted means the insurer has a certificate of authority issued by the North Carolina Department of Insurance (NCDOI) to operate in North Carolina.
Once admitted, a property and casualty insurer automatically becomes a member of the North Carolina Joint Underwriting Association (the Fair Plan), the North Carolina Insurance Underwriting Association (the Beach Plan), The Property & Casualty Guaranty Fund, North Carolina Motor Vehicle Reinsurance Facility (NCMVRF) and the North Carolina Rate Bureau (NCRB) for the respective risks.
The NC Rate Bureau is responsible for deciding the core policy forms and mandatory endorsements sold in North Carolina for all property, auto and workers compensation policies. The NCRB establishes the manual rates for each of these policy forms using established underwriting criteria.
These policy forms and manual rates are filed by the NCRB on behalf of it’s members to the NCDOI. The Insurance Commissioner of North Carolina can approve, reject or allow the changes by default.
The Board of Directors of the NCRB is composed of six mutual insurers’ representatives and six stock insurers’ representatives. The Insurance Commissioner of North Carolina is an ex-ficio member.
The fifteen (15) insurers, who supported the abolishment of the NC Rate Bureau, do not want to use the policy forms approved in North Carolina. They want to file their policy contracts directly with the NCDOI. This direct filing method has been used by the life, accident and health carriers since the establishment of the NCDOI. It reinforces the legal position “Buyer Beware” or “Caveat Emptor” statutes. The consumer can no longer compare equal products and price. And, it created added Error & Omission exposures to the licensed insurance agent when replacing coverage.
The direct filing method along with excessive government mandates have caused a twenty (20) year health care crisis in North Carolina. “Death Spiral” health insurance policies is one example.
Medicare Supplements haven’t had these problems until late because the Federal government established the medigap policy forms to be sold. The NCDOI has recently not enforced the Kennedy-Kassebaum Act creating havoc for disabled persons and seniors trying to change carriers without exclusions.
The real problem for many of these fifteen (15) insurers is the NC Motor Vehicle Reinsurance Facility (NCMVRF). It was originally designed so an carrier could reinsure upto twenty-five (25%) percent of it’s undesired auto liability exposure. Some carriers reinsure one hundred (100%) percent to the NCMVRF today. Every personal auto insurer admitted in North Carolina reinsures some portion of its personal auto liability exposure with the NCMVRF.
There are two problems with the NCMVRF. First, the North Carolina courts have modified the auto insurance policy by its decisions. The courts have given third party liability coverage for undisclosed drivers under the responsible vehicle policy. Second, the NCMVRF does not use statistical analysis for establishing the “Ceded Rate”. It basically charges more premium for more insurance points.
A few of these carriers have charged their insured higher than manual rates for homeowner policies and personal auto physical damage coverage and failed to disclose it or have the client to sign a “Consent to Rate” form. A “Consent to Rate” form is an acknowledgement and consent by the insured to allow the insurer to charge more than the filed and approved manual rate for coverage.
A “Consent to Rate” form allows a personal auto insurer to charge five hundred (500%) percent or five (5) times the manual rate for auto physical damage coverage. At some point you would expect the consumer to say, No to these rates.
Carriers such as State Farm (Mutual), Allstate (Stock) and NC Farm Bureau (Mutual) target market is the preferred auto clients who own a home. Today, they have a dwindling client base since homeownership and married households are down significantly. This factors lead to higher property losses and reduced profits.
The direct writers with the late Insurance Commissioner James E. Long caused the current homeowner crisis in eastern North Carolina. In 1992 Mr. Long refused to enforce unfair trade practice laws (Federal and State) concerning red-lining and the direct writers significant deviations (less than) from the homeowner policy manual rates. Many carriers could not obtain reinsurance for their small exposures or premium volume to justify the homeowner product line.
Mr. Long stated, he wasn’t concerned that only a few carriers would insure homes in coastal counties of North Carolina. Today, those few companies have too large exposures and are canceling policies.
The NCDOI Commissioner is elected to be the advocate for the insurance consumer and assure insurance carrier admitted to North Carolina are solvent.
Recently, an insurance carrier quoted property coverage for a hardware store in Pitt County, NC. The carrier had excluded wind and hail. Pitt County is NOT one of the eighteen (18) coastal county. Since it is not a coastal county the business owner could not obtain wind and hail coverage through the NCIUA “Beach Plan”.
The bigger question is who at the NCDOI approved a property form without wind and hail coverage for a non-coastal county? Where was the NC Rate Bureau? And, where was Insurance Commissioner Godwin?
A healthly insurance market is the goal. Having a level playing field creates profitable insurers, expands competition, lowers insurance premiums and adds value to products.
To correct the problems the NC Rate Bureau needs to corral its membership. The NCDOI lead by Commissioner Godwin need to protect the insurance consumer forewhich the NCDOI was originally created. They collectively need to request the North Carolina Legislature make changes to insurance law and enforce the insurance contracts in the courts. The carriers need to use the filed manual rates as a guide for the core standard business, discontinue the use of “Concent to Rate” forms. Consumers, who do not qualify for manual or deviated rates, can be written with the residual market mechanisms or excess and surplus lines carriers.
North Carolina will encourage the consumer to disclose material facts or have the coverage denied. Consumers, who continue these breaches of good faith, will be placed with non-admitted carriers. These consumers will no longer be protected by the North carolina’s Property and Casualty Guaranty Fund and will play a five (5%) sales tax to the state.
The carriers would obtain quality insureds, the average consumer will have lower rates, the nonstandard consumer gets higher premiums and North Carolina gets more sales tax.
Insurance is a risk management tool. The consumer should only buy insurance coverage on those exposures they can’t not afford to pay themselves.
The article doesn’t tell the whole story. It has a slant toward abolishing the current property and casualty system.
The North Carolina Rate Bureau is an association of all property and liability carrier admitted in North Carolina. Admitted means the insurer has a certificate of authority issued by the North Carolina Department of Insurance (NCDOI) to operate in North Carolina.
Once admitted, a property and casualty insurer automatically becomes a member of the North Carolina Joint Underwriting Association (the Fair Plan), the North Carolina Insurance Underwriting Association (the Beach Plan), The Property & Casualty Guaranty Fund, North Carolina Motor Vehicle Reinsurance Facility (NCMVRF) and the North Carolina Rate Bureau (NCRB) for the respective risks.
The NC Rate Bureau is responsible for deciding the core policy forms and mandatory endorsements sold in North Carolina for all property, auto and workers compensation policies. The NCRB establishes the manual rates for each of these policy forms using established underwriting criteria.
These policy forms and manual rates are filed by the NCRB on behalf of it’s members to the NCDOI. The Insurance Commissioner of North Carolina can approve, reject or allow the changes by default.
The Board of Directors of the NCRB is composed of six mutual insurers’ representatives and six stock insurers’ representatives. The Insurance Commissioner of North Carolina is an ex-ficio member.
The fifteen (15) insurers, who supported the abolishment of the NC Rate Bureau, do not want to use the policy forms approved in North Carolina. They want to file their policy contracts directly with the NCDOI. This direct filing method has been used by the life, accident and health carriers since the establishment of the NCDOI. It reinforces the legal position “Buyer Beware” or “Caveat Emptor” statutes. The consumer can no longer compare equal products and price. And, it created added Error & Omission exposures to the licensed insurance agent when replacing coverage.
The direct filing method along with excessive government mandates have caused a twenty (20) year health care crisis in North Carolina. “Death Spiral” health insurance policies is one example.
Medicare Supplements haven’t had these problems until late because the Federal government established the medigap policy forms to be sold. The NCDOI has recently not enforced the Kennedy-Kassebaum Act creating havoc for disabled persons and seniors trying to change carriers without exclusions.
The real problem for many of these fifteen (15) insurers is the NC Motor Vehicle Reinsurance Facility (NCMVRF). It was originally designed so an carrier could reinsure upto twenty-five (25%) percent of it’s undesired auto liability exposure. Some carriers reinsure one hundred (100%) percent to the NCMVRF today. Every personal auto insurer admitted in North Carolina reinsures some portion of its personal auto liability exposure with the NCMVRF.
There are two problems with the NCMVRF. First, the North Carolina courts have modified the auto insurance policy by its decisions. The courts have given third party liability coverage for undisclosed drivers under the responsible vehicle policy. Second, the NCMVRF does not use statistical analysis for establishing the “Ceded Rate”. It basically charges more premium for more insurance points.
A few of these carriers have charged their insured higher than manual rates for homeowner policies and personal auto physical damage coverage and failed to disclose it or have the client to sign a “Consent to Rate” form. A “Consent to Rate” form is an acknowledgement and consent by the insured to allow the insurer to charge more than the filed and approved manual rate for coverage.
A “Consent to Rate” form allows a personal auto insurer to charge five hundred (500%) percent or five (5) times the manual rate for auto physical damage coverage. At some point you would expect the consumer to say, No to these rates.
Carriers such as State Farm (Mutual), Allstate (Stock) and NC Farm Bureau (Mutual) target market is the preferred auto clients who own a home. Today, they have a dwindling client base since homeownership and married households are down significantly. This factors lead to higher property losses and reduced profits.
The direct writers with the late Insurance Commissioner James E. Long caused the current homeowner crisis in eastern North Carolina. In 1992 Mr. Long refused to enforce unfair trade practice laws (Federal and State) concerning red-lining and the direct writers significant deviations (less than) from the homeowner policy manual rates. Many carriers could not obtain reinsurance for their small exposures or premium volume to justify the homeowner product line.
Mr. Long stated, he wasn’t concerned that only a few carriers would insure homes in coastal counties of North Carolina. Today, those few companies have too large exposures and are canceling policies.
The NCDOI Commissioner is elected to be the advocate for the insurance consumer and assure insurance carrier admitted to North Carolina are solvent.
Recently, an insurance carrier quoted property coverage for a hardware store in Pitt County, NC. The carrier had excluded wind and hail. Pitt County is NOT one of the eighteen (18) coastal county. Since it is not a coastal county the business owner could not obtain wind and hail coverage through the NCIUA “Beach Plan”.
The bigger question is who at the NCDOI approved a property form without wind and hail coverage for a non-coastal county? Where was the NC Rate Bureau? And, where was Insurance Commissioner Godwin?
A healthly insurance market is the goal. Having a level playing field creates profitable insurers, expands competition, lowers insurance premiums and adds value to products.
To correct the problems the NC Rate Bureau needs to corral its membership. The NCDOI lead by Commissioner Godwin need to protect the insurance consumer forewhich the NCDOI was originally created. They collectively need to request the North Carolina Legislature make changes to insurance law and enforce the insurance contracts in the courts. The carriers need to use the filed manual rates as a guide for the core standard business, discontinue the use of “Concent to Rate” forms. Consumers, who do not qualify for manual or deviated rates, can be written with the residual market mechanisms or excess and surplus lines carriers.
North Carolina will encourage the consumer to disclose material facts or have the coverage denied. Consumers, who continue these breaches of good faith, will be placed with non-admitted carriers. These consumers will no longer be protected by the North carolina’s Property and Casualty Guaranty Fund and will play a five (5%) sales tax to the state.
The carriers would obtain quality insureds, the average consumer will have lower rates, the nonstandard consumer gets higher premiums and North Carolina gets more sales tax.
Insurance is a risk management tool. The consumer should only buy insurance coverage on those exposures they can’t not afford to pay themselves.