NC INSURANCE COMMISSIONER ORDERS LOWER AUTO RATES

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Associated Press
NC insurance commissioner orders lower auto rates
Associated Press 09.11.08, 5:48 PM ET

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RALEIGH, N.C. -

North Carolina State Insurance Commissioner Jim Long on Thursday rejected an industry request for an almost 13 percent increase in auto rates and has ordered a reduction instead.

Long signed an order requiring a 16.1 percent reduction in private passenger auto rates and an 11.7 percent reduction in motorcycle liability rates.

NOTE: LONG IS A WELL RESPECTED STATE INSURANCE COMMISSIONER.

The reductions are effective Jan. 1.

The North Carolina Rate Bureau's request for a 12.9 percent increase was the subject of rate hearings in July and August.

Long said he decided the requested increase "just wasn't warranted. It's the largest increase they've requested in almost 15 years. I was surprised by the request, especially since last year the bureau filed for no change."

During the hearings, the department's attorney argued that the market for auto insurance had not changed significantly since 2007.

Rate Bureau general manager Ray Evans said the board was "surprised at the magnitude of the decrease. We don't think that's the appropriate decision."

The board meets next week and will decide whether to accept Long's decision or appeal it, he said.

Department experts said the bureau mistakenly included claims arising from the North Carolina Reinsurance Facility when determining its proposed rate increase. The facility insures riskier drivers, and bureau rates don't apply to them.

Instead, the facility files a separate rate proposal using its own claims data. But Evans said the facility also insures some drivers whom it believes should be included in its rate computations.

If the bureau appeals Long's decision, then companies can raise their rates and hold the difference in escrow. If the bureau lost the appeal, companies would have to refund the money in escrow, plus interest.

Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed


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