RALEIGH: April 10, 2007 - Insurance consumers could see higher rates under legislation recently proposed in the North Carolina Senate. Senate Bill 901
would eliminate Insurance Commissioner Jim Long’s authority to set rates. “The insurance ratemaking system proposed in this legislation is almost guaranteed to result in higher rates for North Carolina citizens,” Long said.
“The system we have here in North Carolina has worked well for 50 years. Clearly this is a case of ‘if it ain’t broke, don’t fix it’,” he said. Currently, North Carolina has the 5th lowest auto
insurance rates and the 20th lowest homeowners insurance rates in the nation.
In the current system, citizens are protected in two ways: one, by having an insurance commissioner who recognizes exorbitant and unnecessary rate changes and denies rate hikes when they are not necessary; and two, by the commissioner understanding that insurance companies still must be allowed to make enough profit to remain in business. “It is important for consumers to have affordable rates and also to have
plenty of stable and competitive companies to choose from,” said Long. “The current system strikes that balance fairly. Why change a system that works well for consumers and the companies?”
As the law now reads, if the insurance industry feels the rates Commissioner Long ordered are too low, they can appeal to the Court of Appeals and then to the North Carolina Supreme Court. But every time
the industry has appealed, they’ve lost. “This just proves that the ratemaking system is fair. Just like other parts of our government there is a checks and balances system in place, but Senate Bill 901 will eliminate that system,” Long said.
If Senate Bill 901 is approved, insurance companies in North Carolina will be able to charge consumers
whatever rates they choose while making it extremely difficult for the Commissioner of Insurance and the state insurance department to dispute these rate hikes.
Officials at the Department of Insurance believe this provides an unfair advantage for the insurance industry and is against the interest of North Carolina customers.
Senate Bill 901 also:
* Shifts the burden of proof to Commissioner of Insurance - contrary to all other judicial protocol, the Commissioner of Insurance will be charged with proving that a rate hike is not warranted, rather than the industry having to prove that they need higher rates.
* Removes limitations for auto and workers’ compensation rate filings - Senate Bill 901 allows for
multiple filings in a year, which means that consumers could face several rate increases in a calendar year.
* Allows for immediate rate change - the filed rates would go into effect immediately and would remain effective unless the Commissioner disputes the filing and a special judge agrees with the Commissioner.
* Allows companies to charge rates that are higher than the maximum approved rates
While the current system works well for consumers and insurance companies, the proposed system in Senate Bill 901 benefits
only the insurance companies. Commissioner Long wants citizens to be
aware of this proposed legislation and understand its potential impact on their pocketbooks. “If Senate Bill 901 passes, you will almost certainly be paying
more money for your insurance,” he said. “Speak up now and let your senators know that you do not support changing the way insurance rates are set.”
Senator contact information is available on the General Assembly’s web site at http://www.ncleg.net
For more information about Senate Bill 901 and how it changes the
current ratemaking system, visit the Dept. of Insurance’s web site at http://www.ncdoi.com/901.asp
Source: North Carolina Department of Insurance.
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