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There's no need to tinker with NC's auto insurance rate system

The complete article can be found here: The News & Observer

Look out below. That’s the caution for the innocent bystanders in a coming fight from auto insurance companies to change North Carolina’s method of regulating rates. The companies have tried this before, probably figuring that “business-friendly” Republicans now in charge of the General Assembly would take their side against consumers’ best interests.

That effort fell short, without any indication that policy-holders were dissatisfied with the way Insurance Commissioner Wayne Goodwin and his office have continued to maintain a system that has North Carolina’s rates among the lowest in the country, the sixth lowest in fact.

North Carolina’s system – the only one of its kind in the country – is called a “collective” system, in which the N.C. Rate Bureau gathers data from all insurance companies and then presents any rate change request to the commissioner, who can approve or deny.

The commissioner’s office traditionally has not been overbearing. It weighs any rate request against claims and expenses and trends and then approves a rate increase or negotiates. Evidenced by the state’s low rates, the system has worked splendidly for the people.

The insurers, who fly under the banner of a group called FAIR NC, want another system. They want insurers to have the option to bail out of the collective system. They say the commissioner still could reject rate hikes he deemed excessive. But if any insurer could opt out of a system that works, that system would be weakened and so would the commissioner’s authority.

The companies – not all companies are on board – say their proposal would give consumers more choice and could reward good drivers. Goodwin says it would open up the possibility that the companies could actually charge more, as the current system allows them to charge less than the state-approved rates.

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