Lawmakers Reconsider Auto Insurance Modernization

Jan 31, 2012, 10:35 ET from FAIR NC

RALEIGH, N.C., Jan. 31, 2012 /PRNewswire-USNewswire/ -- Last week, lawmakers at the Capitol were presented with a fresh proposal to upgrade the auto insurance regulatory system in North Carolina. Members of the FAIR NC (Fair Automobile Insurance Rates for North Carolina) coalition carried on a thoughtful dialogue with legislators and experts alike and laid out a solid solution for North Carolina consumers.

The presentation focused on two important changes: First, eliminating the hidden tax paid by 85% of North Carolina's drivers to subsidize higher risk drivers and second, forcing companies to compete on price.

According to the National Association of Insurance Commissioners (NAIC), states that have modernized their systems have seen an increase in the number of companies doing business, with more choices, downward pressure on rates, and increased jobs.

Just last week the NAIC released a study showing that in the two years since Massachusetts stopped setting a cap on insurance premiums, rates went down by 13%.  States that have modernized have not gone back to outdated bureaucratic systems.  North Carolina is the only remaining state that continues to use an antiquated system of government rate setting rather than requiring insurers to compete for customers.

As the legislative study committee gave thoughtful consideration to the ramifications of change, speakers reinforced the necessity of FAIR NC's proposal, and its non-disruptive impact on consumers. "It does NOT eliminate either the rate bureau or the reinsurance facility or the ability of the Commissioner to disapprove rates," said David Stollar of FAIR NC.  "It does NOT 'blow up the system,' disrupt the market, or do anything that by itself would change average rates. "

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