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Should N.C. insurers set own auto rates? NO

Proposed legislation is driven by companies' greed

By Wayne Goodwin
Special to the Observer

For years, big out-of-state insurance companies have fought to change the way we regulate car insurance in North Carolina. After another failed attempt in the legislature in April, they’re at it again. Their persistence is driven by one thing. Greed. To put it simply, they see an opportunity to make more money off of N.C. drivers.

Their lobbyists have descended on the legislature in a desperate effort to amend Senate Bill 180. The amendment would allow them to bypass the cap on rates that is set by the state and file for unlimited rate increases whenever they want. The cost of car insurance will inevitably go up for drivers across the state. But they won’t tell you that.

Here are the facts. This is not a modest reform or compromise. It’s an overhaul of a system that protects our drivers from insurance companies that are just out to make another buck.

The amendment doesn’t guarantee more competition. It doesn’t guarantee that more discounts will be available. What it guarantees is that it will be much easier for insurance companies to raise your car insurance rates. Under this proposal, it would be nearly impossible – legally and logistically – for the Commissioner of Insurance to prevent rate increases.

Alarmingly, the companies’ proposal would allow them to use national data to justify their rate hikes. Why would we want to base our rates on data from states that have much higher car insurance rates than we do?

We currently have some of the very lowest rates in the country. The National Association of Insurance Commissioners ranks North Carolina as having the seventh-lowest average auto rates; Insure.com puts us at third-lowest. Additionally, our drivers have a lot of choices. More than 160 companies write auto insurance here. I can’t even name a car insurance company that wants to be doing business in North Carolina that isn’t already here. And if you’ve ever shopped around, you know they can and do offer discounts to compete for your business. They need no law change to charge drivers less.

In its original form, Senate Bill 180 is good. It would give companies more flexibility in offering discounts and enhancements they tout in other states to N.C. drivers. I’m all for that. But putting in the proposed amendment is like ruining a good recipe with bad eggs.

Let’s face it. None of us want to spend our hard-earned money on car insurance, but it’s a product you’re required to purchase to legally drive a vehicle in North Carolina. It’s not a free market. If our state forces you to buy car insurance, it only makes sense that our laws ensure it is both available and affordable. That’s why we have sensible regulation in place. It’s regulation that first and foremost protects you, the driver.

North Carolina’s auto insurance market is stable and it’s strong. Insurers make enough money that it’s attractive for them to do business. Drivers get low rates. With an overhaul of our current system, we have a lot to lose and little or nothing to gain. It’s time for our legislators, once and for all, to stand up for N.C. drivers and tell these insurance companies “no.”

Wayne Goodwin is the North Carolina insurance commissioner.
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