Long orders decrease in auto rates

RALEIGH -- State Insurance Commissioner Jim Long today rebuffed an industry request for a hefty hike in auto insurance rates -- and ordered a whopping 16.1 percent decrease instead.

The Insurance Department estimates that the ruling represents a potential savings of more than $1 billion in premiums for the state's motorists.

The ruling by Long, who isn't seeking re-election after 24 years as commissioner, comes after a hearing in which the department's staff and the N.C. Rate Bureau, which represents insurers, squared off. The hearing was necessitated by the two sides' failure to see eye-to-eye on rates.

The Bureau requested a 12.9 percent increase, the largest hike sought since 1994.

The Bureau can appeal Long's ruling to the courts. If it does, insurers can raise their rates while awaiting a decision -- and put into escrow the premiums collected above the rate ordered by Long.

If the Bureau lost such an appeal, it would have to refund the money, plus interest, to policyholders. If the Bureau doesn't appeal, the new, lower rate would take effect Jan. 1.

The industry last proposed a rate increase in 2006. The last rate hearing took effect in 2005. Hearings are conducted only if the two sides fail to negotiate a compromise rate.

Long typically has ordered a rate that undercuts the industry's request, but the gap between the two has never been as large as today's order.

The decrease ordered by Long covers the maximum rate insurers can charge North Carolina drivers. The amount varies by region and with different types of coverage, with competition pushing insurers to charge many drivers less than the maximum rate.

The $1 billion-plus savings calculated by the Insurance Department assumes all drivers are charged the maximum rate.