What changes are being considered to North Carolina’s car insurance market?
The NC General Assembly is considering legislation that would increase competition in the state’s car insurance industry and allow drivers to take advantage of popular discount programs that can lower the cost of car insurance. North Carolina is the only state in the nation that forces companies to collectively develop car insurances rates through a Rate Bureau.
With less government control of prices, insurance companies have more flexibility to set fair rates for individual drivers. Fair rates means good drivers pay less and are no longer forced to subsidize the cost of insuring risky drivers.
Why should North Carolina change how the car insurance industry is regulated?
A free market system will force companies to aggressively compete on price, and allow all drivers to take advantage of popular discount programs that aren’t currently available in North Carolina.
With less government control of prices, insurance companies have more flexibility to set fair rates for individual drivers. Fair rates means good drivers pay less, and are no longer forced to subsidize the cost of insuring risky drivers.
What are the problems with the Rate Bureau approach?
The Rate Bureau system stifles competition, limits consumer choice, and forces good drivers to pay more than they should so risky drivers can pay less. Issues include:
- Government Price Controls: North Carolina mandates how insurance companies set their rates and limits the ability for insurance companies to compete on price. The government price controls force good drivers to pay more, while risky drivers pay less.
- Discounts Not Available in North Carolina: Drivers are not able to take advantage of innovative programs and good driver discounts offered by major insurance companies. Consumer choice is limited.
- Hidden Taxes: Drivers in North Carolina must pay a hidden tax every year on every car they own to subsidize the cost of insuring risky drivers.
Will this legislation get rid of the Rate Bureau?
No. Our proposal would keep the Rate Bureau in place, but give companies the ability to opt out of it. For those who like the current system, they can continue to do business as usual.
How do other states regulate car insurance?
Every other state in the nation has a competitive, free market system that forces car insurance companies to aggressively compete for your business. By giving companies the ability to opt out of the Rate Bureau, you can enjoy the advantages of a competitive, free market system.
Why can’t drivers in North Carolina take advantage of popular discount programs?
Because North Carolina mandates how insurance companies set their rates, drivers are not able to take advantage of innovative programs and good driver discounts offered by major insurance companies.
Why does North Carolina charge all drivers a hidden tax?
Drivers in North Carolina are charged a hidden tax every year for every car they own. The tax is used to subsidize the cost of insuring risky drivers.
How will less regulation impact rates?
With less government control of prices, insurance companies have more flexibility to set fair rates for individual drivers. Fair rates means good drivers pay less and are no longer forced to subsidize the cost of insuring risky drivers.
Proposed legislation would keep the Rate Bureau in place, so companies who like the current system can continue to do business as usual.
How will consumers be protected from excessive rate increases?
With increased competition, consumer will be able to shop for the best price and any company that attempts to charge excessive rates will lose. A competitive market – not government regulation – is the best way to control costs.
An additional layer of protection exists beyond that: Companies who choose to opt out of the Rate Bureau will still be required to submit their rates to the Insurance Commissioner for review. Commissioner Goodwin maintains the authority to disapprove any proposed rate change considered excessive, inadequate or unfairly discriminatory.
What’s the history of the Rate Bureau? Why was it formed?
While many people believe that the Rate Bureau was created to protect consumers, it was actually created in the 1970s to protect insurance companies. The Rate Bureau approach provides guaranteed profits to insurance companies. A free market system does not.
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