State Sets June Hearing On NC Auto Insurance Rates

State Insurance Commissioner Jim Long has announced a hearing on North Carolina automobile insurance rates set for June.

This announcement comes after the North Carolina Rate Bureau, an independent organization that represents all auto insurance companies in the state, filed for a 6.7 percent increase in rates Feb. 1. However, the bureau recently has informed the department about a data error that will revise their initial request to a 7.6 percent overall increase.

Department officials reviewed the rate filing and determined that the requested increase was not justified. State law requires Long to 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. However, the 2005 hearings lasted more than four months.

“This filing came on the heels of the 2005 settlement where Commissioner Long ordered an overall decrease in auto rates,” said Sherri Hubbard, the department’s lead rate attorney on this case. “So why now, only a month later, do North Carolinians need an increase after years of low rates from financially sound companies?”

Last month, Long ordered a 2.5 percent overall decrease in auto rates when the bureau requested a 9.6 percent increase. In 2004, the department negotiated a zero percent change in rates instead of the requested 12.3 percent increase.

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.

In 2004, 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.