Point of View

Auto insurers push legislation that would raise NC rates

June 17, 2014 

If you’re trying to make sense of the publicity blitz by a bunch of big, out-of-state insurance companies pushing legislation to ditch North Carolina’s competitive, low-cost car insurance system, it helps to watch what they do, not what they say.

Keep in mind that North Carolina has the lowest car insurance rates in the Southeast and the sixth-lowest in America. Rates are higher for every one of our neighboring states. After South Carolina made changes like those proposed here, rates shot up 23 percent. As a result, the average South Carolina driver pays $138 more a year than North Carolina drivers do.

Admittedly, it’s hard to keep up with the misrepresentations of State Farm, Allstate, Geico, Progressive and other members of the so-called “FAIRNC” gang. They hope legislators, the press and the public will fall for their deceptive rhetoric without finding out the truth. Here it is:

FAIRNC claims that car insurance discounts for good drivers, good students and members of the military “are available in almost every state except North Carolina.” However, almost all of the discounts advertised on TV are available in North Carolina. In fact, almost 200 insurers offer more than 2,000 discounts to North Carolina drivers – 2,081 discounts, to be exact. The state’s official list is 48 pages long.

FAIRNC members Allstate, Erie, Geico, State Farm and USAA themselves offer discounts for good drivers in North Carolina they say are not available here. Across the state, almost 70 companies give discounts under categories such as Good Drivers, Careful Drivers, Defensive Drivers, Mature Drivers, Exceptional Drivers, Premier Drivers, Premier Plus Drivers, Preferred Plus Drivers, Super Preferred Drivers, Safe Drivers.

In addition, several FAIRNC companies offer military discounts here, including Geico, Liberty Mutual and USAA. And 11 companies offer good student discounts, including State Auto, a FAIRNC member.

FAIRNC claims that North Carolina “requires mandatory rate increases for accidents and tickets – no matter how good your driving record.” North Carolina’s Safe Driver Incentive Plan, however, typically raises rates only for causing major wrecks, speeding more than 10 mph or speeding in a school zone.

Even then, there are many ways drivers can avoid rate increases. For example, multiple insurers offer offsetting discounts and “accident forgiveness” – including FAIRNC members Allstate, State Farm, Progressive, Erie and Kemper.

FAIRNC calls its proposed legislation a “good driver discount bill.” But the real aim is to escape the current system’s maximum limit on how much they can charge – especially for young good drivers, including students, military members and teenage workers with no accidents or tickets.

According to the Insurance Information Institute’s 2014 Insurance Fact Book, the average annual auto rates in North Carolina and its neighbors are:

North Carolina: $599.90.

Georgia: $749.09.

South Carolina: $737.74.

Virginia: $673.62.

Tennessee: $641.17.

While touting their “good driver” bill, FAIRNC’s lobbyists have admitted to select audiences that their plan would give a price break to “riskier drivers” and even those with “a couple of DUIs.” Why should voters want their legislators to reward speed demons and drunk drivers? In reality, this harmful legislation should be called “The Bad Driver Discount Bill.”

Not a single auto insurer based in North Carolina supports FAIRNC’s misguided push to discard the state’s current system. It provides strong consumer protections for a mandatory product at low rates for drivers.

Instead of being misled into supporting a controversial proposal that would hurt consumers and create chaos in North Carolina’s stable, low-cost, highly competitive auto insurance market, legislators should support Sen. Tom Apodaca’s Senate Bill 180, which passed the Senate unanimously last year. SB 180 would give auto insurers even more flexibility to offer additional discounts and innovative products to North Carolina drivers.

FAIRNC won’t tell you this, but under current law, North Carolina’s 157 auto insurers can reduce their customers’ rates as much as they want, any time they like. They don’t need any new laws to lower your rates. They want a new law so they can raise your rates.

Rich Winkler is an independent insurance agent with offices across Eastern North Carolina.

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