North Carolina auto insurers don’t know what, if any, rate increase they will be permitted but they know that it will not be as much as the 13 percent average increase they requested.
The North Carolina Department of Insurance has scheduled a rate hearing for June 30, after reviewing the North Carolina Rate Bureau’s filing and coming away with questions.
The industry rating bureau will have to answer those questions, which include why it incorporated losses from the high risk pool, the North Carolina Reinsurance Facility, into its voluntary market filing.
Rates for the reinsurance facility are set in a separate filing, according to state officials, and the voluntary market rate should not reflect losses incurred and premiums collected from facility business. This year’s bureau filing, however, includes the losses from the facility – without matching premiums – effectively skewing the data and showing a false need for higher rates overall, according to the state.
“This year’s request is the largest since 1994, and once again we question the tactics used by the insurance companies in determining this amount,” said Sherri Hubbard, the department’s lead rate attorney. “Several technical problems with the filing exist, but the issue of including facility losses without showing them offset by facility premiums is particularly egregious.”
Commissioner Jim Long will decide what rate change, if any, is warranted during the hearing. If the bureau wishes to appeal his decision, it can do so through the court system, and companies can raise rates while awaiting an appeal decision. The difference in the ordered rate and the implemented rate must be held in escrow. If the bureau loses its appeal, the escrowed money must be refunded to policyholders who paid too much.