In the latest victory for North Carolina’s 1 million car owners and drivers, the State Insurance Commission has reached a settlement with insurance companies to refund some $50 million.
The recent spat between the insurance commission and the insurance industry has also resulted in major benefits for the state’s policyholders. Aside from the refund, private car owners will also enjoy lower rates thanks to an out-of-court agreement between the providers and the state government. Rates will also remain frozen for the next two years as part of the settlement.
Wayne Goodwin, North Carolina’s insurance commissioner, said that some of the state’s motorists are entitled to about $50 in refunds. They are expected to receive checks by the middle of next year. The new rates will also take effect on the first day of November this year. Goodwin added that the changes will be retroactive to January 1 of the present year. In all, the state’s residents can expect a total savings of $545 million.
Earlier this year, insurers requested a rate increase of 9.4 percent. The state government has control over car insurance rates. Goodwin denied the companies’ requests and has instead ordered a rate cut of 1.4 percent. He cited the current economic slump as the primary reason for slashing rates.
AAA Carolinas spokesman Bernard Byrnes lauded the developments, saying that Goodwin has done the right thing by helping North Carolina drivers save money.
According to the state’s Insurance Department, an estimated 1 million out of the 3.8 million policyholders were charged higher rates by the different insurance companies. This entitles them to refunds and even interest.
State officials say that not all car owners are eligible for a refund because not all insurance firms opted for a higher rates. Some providers chose not to ask the state for higher rates, knowing that they will be required to issue refunds if the request is denied. Because of this, only policyholders who paid for more expensive premiums can get a refund.
The trouble started last year when insurers requested a 12.9 percent increase after citing rising medical care and car repair costs. However, the late insurance commissioner Jim Long denied the request after determining that the increase would be unjustified. Instead, Long ordered a 12 percent decrease. Insurance companies then brought the issue to the Court of Appeals for reconsideration but at the same time scaled back their request to 9.4 percent.