RALEIGH Is it more important to keep overall car insurance premiums low, or to make sure everyone is paying what they deserve?
North Carolina legislators once again examining the unique rate-setting system for the state's roughly 7 million insured personal vehicles will be hard-pressed in 2012 to agree whether changes are needed to address the balance between insurance risks and costs. Insurers are divided on the issue.
Proposals floated in 2011 at the General Assembly to alter the system could have lowered rates for bad drivers considered too risky for conventional insurance. But supporters of the current system say the bills would have raised rates on many others who have neither caused accidents nor been convicted of speeding recently, yet still sit in the state's large high-risk pool.
The proposals are about better matching premium rates with the level of risk each driver presents, according to a group of insurers led by national industry leader State Farm, along with Geico, Progressive and trade associations seeking a system overhaul. They say they're hamstrung in what they can charge customers because all auto insurers file one combined annual plan to raise or lower rates together through what's called the N.C. Rate Bureau. The state insurance commissioner can approve or change those rates.
The coalition supported legislation filed this year that would have eliminated the Rate Bureau for auto insurance and given insurance companies more authority to raise or decrease rates by up to 15 percent overall annually without the commissioner's consent.
"It's an antiquated system that was used way long ago and no longer has a purpose in today's marketplace," said Liz Reynolds with the National Association of Mutual Insurance Companies, a member of the Fair Automobile Rates for North Carolina coalition.
Nationwide Insurance, which has the No. 1 automobile market share in the state, along with N.C. Farm Bureau Insurance at No. 3, and others, aren't in the coalition. Nationwide says the rate-filing mechanism promotes stability and hasn't discouraged insurers from writing policies in North Carolina.
Depending on who's calculating, North Carolina's average premium rates rank seventh or eighth lowest in the country.
Insurance commissioner Wayne Goodwin, who opposed the 2011 bills, said the changes would have harmed the public.
The Republican-led Legislature agreed to study the auto insurance system over the next few months, only three years after a similar panel created under Democratic rule covered the same ground.
Source: http://www.charlotteobserver.com/2011/12/26/2876609/nc-looks-again-at-auto-insurance.html
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