North Carolina Insurance Commissioner Jim Long has signed an order requiring a 16.1 percent reduction in private passenger auto rates, effective Jan. 1."After listening to testimony from both sides during the rate hearings in July and August, I found that the Rate Bureau's request for a 12.9 percent increase just wasn't warranted," said Long. "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 last year, when companies did not seek a rate increase.
Rate experts with the Department say the Rate Bureau employed faulty calculations when determining the proposed rate increase. For example, the Bureau filing included claims arising from the North Carolina Reinsurance Facility - an entity which insures riskier drivers - even though Bureau rates do not apply to those drivers. In fact, the Reinsurance Facility files a separate rate proposal using its own claims data.
Long ultimately agreed with Department experts that the Bureau filing presented a skewed picture of the marketplace.
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