Support for insurance bill

Regarding the March 30 article "Bill would strip insurance commissioner's rate-setting power":

The Insurance Federation of North Carolina supports Sen. Tony Rand's proposal for a fair hearing process for disputed rate filings, where an impartial judge hears arguments from the Department of Insurance and the N.C. Rate Bureau (which represents insurers on rate matters).

It is important to note that the legislation does not change requirements that rates not be "inadequate, excessive nor unfairly discriminatory." And the Department of Insurance would still have full authority to negotiate rate settlements and to review the financial affairs and market conduct of insurers.

If the current system were indeed working, the number of motorists in the N.C. Reinsurance Facility (the high-risk pool for those for whom the current rate is not sufficient to cover the risk) would be low.

According to the 2006-2007 Automobile Insurance Plans Service Office Fact Book, the N.C. Reinsurance Facility is 30 percent of the state's liability insurance market, while the national average for state high-risk auto insurance pools is less than 2 percent. In fact, North Carolina's high-risk auto insurance pool is now bigger than all other states' combined.

The current system forces North Carolina motorists to pay a surcharge on top of their own premiums for those in the N.C. Reinsurance Facility. Last year, consumers had to pay to cover $250 million in accidents caused by those in the Reinsurance Facility. Fairly set rates for all risks would reduce the size of the Reinsurance Facility and reduce or eliminate this forced surcharge.

To that point, current law does not allow this surcharge to be disclosed to consumers. The Insurance Federation of North Carolina is also supporting legislation sponsored by Rand that would require full disclosure of the surcharge on insurance premium notices.

Joe Stewart

Executive Director, Insurance Federation of North Carolina

Raleigh

(The length limit on letters was waived to permit a fuller response to the article and a subsequent editorial.)