Technical concerns jumped to the fore as the state Department of Insurance and insurers squared off about auto insurance rates at a hearing Monday.

The dispute's outcome will be anything but technical. The difference in the rates being sought by the two sides potentially amounts to $1.4 billion in premiums, Sherri Hubbard, special counsel for the state Insurance Department, said during her opening statement Monday.

The N.C. Rate Bureau, which represents the state's 144 auto insurers, is seeking a 13 percent increase in average premiums. Last year, the rate bureau asked for no price increase, Hubbard said.

"The higher insurance premiums proposed for next year might make you scratch your head a bit, given the recent media stories affirming statistics as to a significant drop in miles driven due to the rapid rise in gas prices," Hubbard said. "A drop in miles driven, of course, implies fewer car crashes and less claims for insurance companies to pay."

Hubbard said state witnesses will present data showing instead that rates should be cut 17.9 percent to 20.5 percent.

At issue is the maximum increase insurers can charge North Carolina drivers. The amount would vary by region and with different types of coverage. Competition prods insurers to charge many drivers less than the maximum rate.

The $1.4 billion difference between the two side preferred rates, calculated by the Insurance Department, assumes that all drivers would be charged the maximum rate.

Lawyer Michael Strickland, who represents the rate bureau, argued in his opening statement that the key differences between the two sides are the definition of profit and the pool of drivers whose claims would be considered in calculating rates.

The state erroneously calculates the "fair profit" that the insurers are entitled to and the state's auto insurers have been earning a below-average profit, Strickland said.

The state is wrongly excluding the claims of certain drivers, such as high-risk drivers, he said.

That group, which includes inexperienced motorists and those who have racked up insurance points against their licenses, are assigned to the N.C. Reinsurance Facility.

Excluding those drivers would mean that rates would be set based only on the experience of "best-risk" drivers, Strickland said.

The increase being sought by the insurers is the highest since 1994, and the second-highest since Insurance Commissioner Jim Long took office in 1985.

Long, who isn't seeking re-election in the fall, ultimately will rule on a rate, although his decision can be appealed to the courts. The hearing is expected to continue through July.

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