Changes In North Carolina Car Insurance Law That Will Raise Rates In 2011
The old saying, "if it ain't broke, don't fix it," aptly applies to recent changes being proposed for North Carolina car insurance laws. Many people are voicing their concerns about government meddling they feel is unneeded. It seems that every time an opposing political party takes over a majority in the North Carolina House or Senate, changes are proposed to the state's insurance laws that affect people's car insurance rates.
For the most part, residents like their North Carolina car insurance system and are reluctant to have it altered, especially when those changes seem to suggest more expensive car insurance rates. Senate Bill 477, which is backed by the largest insurance companies doing business in the state, proposes to reduce and then eliminate the high-risk pool of drivers into which a full 20% of North Carolina drivers are currently assigned. This state is recognized as having more designated 'high-risk' drivers than any other state in the Union and accounts for more of those than the other 49 states combined.
As a result, every insured driver in N.C. is assessed a 'hidden surcharge', which basically goes to subsidize this high-risk pool. Abolishing the pool actually seems like a good idea and as the State Governor observes, it's hard to believe that 80% of all the nation's high-risk drivers live in North Carolina. People still have doubts, though, especially when the bill is backed by big insurance companies.
Senate Bill 490, however, is the one that has most people concerned as it proposes to eliminate the State Insurance Commissioner's ability to regulate North Carolina car insurance companies in several areas. Insurance rates in the state are historically low; it has the eighth lowest rates in the country, and the very lowest of all the other southeastern states. SB 490 would take away the Insurance Commissioner's ability to cap car insurance premium rates and, basically, enable car insurance companies to self-regulate and set premium rates at whatever they want, allowing free market competition to determine pricing.
This is causing concern among citizens in a state where car insurance premium rates have been held relatively low by rate caps implemented by the State Insurance Commission. Refunds in the millions of dollars have also been given to policyholders in the past, at the order of the Insurance Commissioner, by insurance companies shown to have overcharged in their premium rates. If the new laws are implemented, these protective safeguards will be gone.
No one wants to pay more for insurance than they have to, especially when that insurance is state mandated. North Carolinians like the current system, but may be in for a rude awakening.