Raleigh, NC – Today, members of the Automobile
Insurance Modernization Joint Select Committee will revisit proposals by the
insurance industry to drastically alter auto insurance regulation. The Committee
was created after two bills, S900 and S901, failed to pass in the 2007
legislative session as a result of consumer
backlash.
In the 2007
session, the insurance industry proposed new laws that would preclude the Office
of the Insurance Commissioner from ensuring that consumers pay a reasonable
price for insurance. Furthermore, industry
proposals would also shrink the reinsurance facility for “high-risk” drivers,
forcing those drivers into the voluntary market and driving up rates for all
consumers.
“In a captive
market, where consumers have no choice but to buy insurance in order to drive a
car, the citizens of North
Carolina need a Commissioner with the authority to set
fair, affordable rates.” stated NCPIRG Advocate Rob Thompson.
Industry
proposals would allow individual companies to raise rates as often as they like,
with no prior approval from the Commissioner or a judge, which could lead to
“rate shock” for consumers. Even worse, consumers aren’t guaranteed a full
refund for rate hikes that are deemed excessive.
“This bill would
legalize price gouging by the insurance industry,” continued Thompson.
Under the
current system, the insurance industry applies for a rate increase to the
Commissioner, who then uses industry’s proposal to set rates that are fair for
both business and consumers. If industry does not agree with the rates set by
the Commissioner, it can appeal to the North Carolina Court of Appeals. In the
last 22 years, industry has appealed only six times and the Court has upheld the
Commissioner’s rulings each of those six times.
The insurance
industry has proposed a system in which companies would set rates that would
immediately take effect. The Commissioner would then be forced to appeal those
rates to a judge in one of North
Carolina’s Business Courts, shifting the burden of proof
from the insurance industry to the Commissioner, who is charged with ensuring
that consumers get a fair shake.
“Why should the
consuming public bear the burden of proof when the insurance industry is the one
asking for a rate hike?” questioned Thompson.
###
NCPIRG is a
statewide nonprofit, nonpartisan public interest organization dedicated to
consumer rights, health care reform, and good government.
