N.C. Department Responds to Auto Rate Filing

Insurance Commissioner Jim Long last week announced the receipt of the 2004 auto insurance rate filing from the North Carolina Rate Bureau (NCRB). The NCRB, an independent organization representing all auto insurance companies in the state, files annually for changes in base auto insurance rates. This year’s request was for a 12.3 percent overall increase. Department of Insurance officials responded with skepticism.

“This time last year, the Bureau agreed to a 15 percent decrease in rates overall,” said Sherri Hubbard, the Department’s lead rate attorney for auto cases. “That resulted in potentially reducing rates by as much as nearly $500 million. Now we hear that companies want to all but erase this decrease. This is very surprising.”

Department actuaries and attorneys reportedly doubt whether losses experienced by insurance companies have changed so drastically within just a year. It seems unlikely, they say, for vehicle costs, numbers of accidents and claims filed have gone up enough to warrant so large an increase, according to Hubbard. “It just doesn’t make sense that we’d see such a large jump over the course of only a year.”

Department officials are also reportedly concerned because this filing comes on the heels of a recent request to redefine auto territories. For the purpose of setting base rates, the state is divided into predefined territories, with each territory being assigned a rate based on its underwriting experience. Some of the proposed territory changes could cause individuals to see drastically higher rates. A hearing on this issue is set for April.

Long was unavailable for comment on the rate filing due to his status as hearing officer in such cases.

If the NCRB and Department officials are unable to reach an agreement, a hearing will be set for this summer, over which Long will preside.

In his 19 years as insurance commissioner, Long has fought to keep auto rates low by negotiating minimal increases or, in most cases, rate decreases. He has reportedly saved drivers an estimated $3.2 billion in potential premiums resulting in North Carolina having the ninth lowest auto rates in the country.