The state’s insurance companies are seeking a double-digit increase in auto insurance rates, the first rate increase sought by the industry since 2009.
Last week the N.C. Rate Bureau, which represents all insurers doing business in the state, filed a request with the state Department of Insurance seeking an average increase of 13.8 percent in automobile insurance rates.
Ray Evans, general manager of the Rate Bureau, said that after years of stability the state’s insurers have been hit with increased claims – both in number and severity – as low gasoline costs and a solid economy have spurred motorists to drive more. The number of miles driven statewide rose 7 percent over the two-year span from 2013 to 2015, he said, while crashes rose 11.1 percent in 2015.
In addition, the Rate Bureau cites a 7 percent increase in crashes stemming from distracted driving and 13.2 percent more alcohol-related deaths across the state in 2015. And the cost of auto body work rose 2.8 percent in 2015 while medical costs rose 4.5 percent.
“All of these things together are why we are requesting an increase at this point,” Evans said.
In the past, rate hike requests haven’t necessarily led to rate hikes.
Auto insurers last sought a 1.4 percent rate hike in 2009, on top of a 9.4 percent increase it requested in 2008. But in the end it reached an agreement with the Insurance Commissioner at the time, Wayne Goodwin, that produced a slight reduction in rates – a one-half percent decrease.
It remains to be seen whether things will be any different under new Commissioner Mike Causey, a Republican who defeated Goodwin’s bid for a third term in office in November’s election.
Insurance Department spokesman Colin Day said both the department and the commissioner are withholding comment on the Rate Bureau’s approximately 1,300-page filing for now.
“We would prefer not to comment until we have a chance to realistically assess the filing,” Day said.
The Insurance Department noted in its announcement of the Rate Bureau’s filing that auto rates haven’t risen in North Carolina in more than a decade. The last increases went into effect in 2001 and 2002, but were erased by a rate decrease in 2003, the department said.
The rate increase sought by the industry would affect the maximum amount companies can charge, with the 13.8 percent average increase applying to motorists who have full coverage – both liability and coverage for physical damage. Any increase would vary by geography and would also be influenced by the elimination of discounts that policyholders have received in the past or the availability of new discounts.
State regulators have 60 days to approve or take exception to the rate hike request. If approved, the rate hikes would take effect Oct. 1. Otherwise, the Insurance Department would conduct a hearing and then issue a ruling.
Rate hike filings typically, but not necessarily, are resolved by a settlement reached by state regulators and the insurers.
“We are ready to try and settle this thing,” Evans said.
Causey campaigned against the state’s unique regulatory system that calls for the Rate Bureau to file a single rate request on behalf of all homeowners and auto insurance companies, calling it outdated and in need of an overhaul. But he also said in an interview in December that he would seek evolutionary changes, rather than revolutionary ones, in the regulatory process.