North Carolina Regulators Consider 13.8% Auto Rate Increase Request

The North Carolina Rate Bureau (NCRB) has requested an average increase of 13.8 percent on private passenger automobile insurance rates in its latest filing with the North Carolina Department of Insurance (NCDOI).

NCRB files rates on behalf of all insurance companies doing business in the state.

The filing, made on Feb. 1, is the first rate change proposed for private passenger auto by NCRB since 2009. NCRB said in a statement it is in response to a “dramatic increase in losses and the cost of those losses since 2014.” If approved, the increase will become effective Oct. 1, 2017.

“While the increase in losses has been a nationwide phenomenon, current data from the North Carolina Division of Motor Vehicles is particularly troubling,” NCRB said. “In 2015, the most recent year available, fatalities increased 8.1 percent from 2014, injuries increased 11.8 percent and reported crashes were up 11.1 percent.”

NCRB said the increase in losses is the result of a number of factors, but the most significant is the rise in the number of miles driven each year. In North Carolina, mileage driven in 2015 was up 13 percent from the average of the preceding five years.

In addition, inflation in 2016 has increased vehicle repair costs by 2.4 percent and total medical care costs by 3.8 percent.

Two other factors more difficult to quantify, according to NCRB, are impaired drivers and distracted drivers. The NCDMV estimates, for example, that in North Carolina, there were 7 percent more crashes in 2015 due to distracted driving and 13.2 percent more alcohol related crashes.

“All of these factors generate a need for the rate increase,” NCRB said.

NCDOI responded to the filing of the proposed rate increase, saying the last auto rate increases occurred in 2001 and 2002 but were wiped out by the rate decrease that occurred in 2003.

NCDOI officials will review the filing in the coming months, and if those officials don’t agree with the requested rates, they will be negotiated with NCRB, NCDOI said. If a settlement cannot be reached within 60 days, a hearing will be called.

“Settlements have been reached on rate filings in the past but if the case goes to a hearing, the hearing officer will rule on rates and any appeal would go through the court system. The rates set in these cases represent the highest amount allowable for all companies to charge,” NCDOI said.