Auto Insurance Bill To Reform Industry Fails House
The House Insurance Committee voted down a bill Tuesday that would have changed how the auto insurance industry makes changes to auto premiums. Currently, auto insurance companies are represented by an agency – the North Carolina Rate Bureau – that files for rate increases on behalf of more than 160 companies each year.
Ray Evans, general manager of the North Carolina Rate Bureau, says the rate bureau did not have a position on the bill, but it would have created a lot more paperwork for the Insurance commissioner.
"If half the companies decide to stay with the bureau, it could be one big [annual filing] and 80 little ones," Evans says.
The bill had support from State Farm, Geico and AllState, which say it would increase competition and save people money. It would have allowed each company to file for a seven percent increase or decrease without going through the rate bureau.
But the legislation had strong opposition from AAA Carolinas. Jim McCafferty, president of AAA Carolinas, says the current system allows for the lowest insurance rates, highest percentage of insured operators and a healthy marketplace.
"By allowing insurance companies to be able to move outside the North Carolina Rate Bureau and file their own rates and their own forms is going to put those three situations in jeopardy and it was like this isn't good for the consumer and that's why AAA get involved this year with it," McCafferty says.
Opponents of the bill included mostly local groups as well as Nationwide Insurance and AARP. They took out radio ads, sent out e-mails to customers and argued similar legislation in other states have resulted in high premiums.
"As far as revenue goes, yes, it would increase our revenues," says Richard Winkler, president of the Alliance of Insurance Agents of North Carolina. "But I think it's kind of supply and demand. If people can't afford the product, they'll go without insurance and we'd have less customers."