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Date: Apr 9, 2005
Contributor: Loraine Lasky

Hearings Set for September On Auto Insurance Rate Hike

State Insurance Commissioner Jim Long has announced that a hearing on auto insurance rates is set for September 2005.

This announcement comes after the North Carolina Rate Bureau, an independent organization that represents all auto insurance companies in the state, filed for an 11.5 percent increase in rates on Feb. 1. Department officials reviewed the rate filing and determined that the requested increase was not justified.

State law requires that Long, as insurance commissioner, 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.

“We are troubled by the bureau’s request to increase rates so severely,” said Sherri Hubbard, the Insurance Department’s lead rate attorney on this case. “Last year we were able to keep rates stable, and the year before that we had a decrease. Why do North Carolinians need such a dramatic increase after years of low rates from financially healthy companies?”

In 2004, the department negotiated a zero percent change in rates after the bureau initially requested a 12.3 percent increase. In 2003, a 15 percent decrease was agreed upon after an initial request of a 10 percent decrease.

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.

Just last year, 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 his 20 years as insurance commissioner, Long said he has fought to keep auto rates low by negotiating minimal increases or, in most cases, rate decreases. He has saved drivers as much as $3.6 billion in potential premiums resulting in North Carolina having the eighth lowest auto rates in the country.



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