N.C. Rate Bureau Asks Insurance Commission for 11.5 Percent Auto Premium Increase

The North Carolina Department of Insurance has expressed doubts about new methodology used by the North Carolina Rate Bureau, which has just requested an 11.5 percent statewide increase in private auto insurance rates. NCRB is an independent organization representing auto insurance companies doing business in the state.

Commissioner Jim Long confirmed receipt of the 2005 Auto Rate Filing from NCRB, which must file proposed rate changes with the department every year by Feb. 1.

“It will take us some time to fully review this filing, and the Rate Bureau is calculating things differently this year,” Sherri Hubbard, the Department’s lead rate attorney for auto cases said. “We’re just not sure yet that the 11.5 percent increase is warranted. Upon initial inspection, we believe this request may not be based on worsening experience — that is, more claims being paid out — but rather as the result of new methodology.”

In 2004, the Department negotiated a zero percent change in rates after the Rate Bureau initially requested a 12.2 percent increase; in 2003, a 15 percent decrease was agreed upon after an initial request of a 10 percent increase.

This year’s filing comes on the heels of a large auto rate refund worth several hundred million dollars. In October and November 2004, North Carolina drivers received refund checks, often for hundreds of dollars. The refunds were the result of the resolution of two contested rate cases in which Commissioner Long ordered rate decreases; the Rate Bureau fought the orders in court. The 2001 case was decided in North Carolina Supreme Court, which ruled in Long’s favor. The 2002 case was quickly settled out of court after that.

If the NCRB and department officials are unable to reach an agreement on this year’s rates, a hearing will be set for later this year, over which Long will preside.