The state’s top insurance regulator has stated that the industry-backed legislation which would allow a hike in rates by auto insurers, by up to 15% per year, will not only lead to increased costs for customers but would also weaken the North Carolina’s regulatory system.
As the Insurance Commissioner has put it, ‘the companies want more of your money’ as these proposals are bound to increase insurance costs for customers. Wayne Goodwin stated this in a news conference. He went on to add that the present system is good as it strikes a good balance between consumer interests as well as the interests of the insurers. The auto insurance companies are presently making decent profits while doing their business and the motorists have relatively lower rates.
The auto insurance rates in North Carolina are among the lowest in the country according to the National Association of Insurance Commissioners. One of the surveys conducted has revealed that an average single 40-year-old male driver who drives to work commuting 12 miles each day in NC paid $1,154 annually which was the 7th lowest in the nation. This was compared to the national average which is $1,561.
Goodwin claimed that it was partly due to the unusual system of regulation followed in North Carolina where the insurance commissioner had the authority to put a cap on auto insurance rates. However, a spokesman from the industry states that the present system was only benefitting the high-risk motorists while raising the prices for the low-risk motorists.
David Stoller, from State Farm Mutual Automobile Insurance Company stated that the best price regulator is competition and that is the reason why companies advertise in the first place – because they want to compete on the rates.
According to the present regulations in North Carolina, each of the 175-odd auto insurance companies that are doing business will have to propose a common increase or decrease in rates. This request is then reviewed by the staff at the Insurance Department in the State as well as Goodwin’s office and then pushed for necessary changes.
Stoller’s group, Fair Automobile Rates for North Carolina states that this amounted to price fixing by the government and the running costs are then passed to the customers.
According to the insurance companies the motorists in the state are paying around $13 each year additionally to cover the costs of running these offices.
