N.C. auto insurance rates ranked third-lowest

Look for a new study that reports the state's auto insurance rates are the third-lowest in the nation to be highlighted in the ongoing debate over the proposed overhaul of the state's regulatory system.

A study issued Monday by Insure.com concluded that only Iowa and Maine motorists currently pay lower auto insurance rates than North Carolina drivers for 2013 model cars. North Carolina drivers pay an average of $1,085 for insurance annually, versus $1,028 in Iowa and $934 in Maine. Louisiana drivers pay the most: $2,699.

"No one should look at (the average) as the number they are going to pay," said Amy Danise, a spokeswoman for Insure.com. She noted that the average rates are based on the rates of 750 vehicles in the 2013 model year, "everything from the cheapest to insure to the most expensive sports car."

Opponents of a major revamp of the way the state regulates auto insurance rates -- including Insurance Commissioner Wayne Goodwin, AARP and a group of insurers that includes Nationwide, the top auto insurer in North Carolina in terms of market share -- have been arguing that the state's low rates show that the system is working.

To buttress their argument, they've been pointing to the latest data from the National Association of Insurance Commissioners -- which dates to 2010 -- that put North Carolina's rates as the seventh-lowest in the nation. (To be sure, the NAIC cautions that state-by-state comparisons are difficult because of the many factors that affect premiums, including accident rates, traffic density, auto theft data, repair costs and state laws.)

Bills to revamp the current system in which the N.C. Rate Bureau submits an overall rate request for the industry that must be approved by the insurance commissioner have been introduced in the state House and Senate. The bills would allow auto insurers to set their own rates as long as the aggregated annual increase didn't exceed 12 percent.

The bills are supported by FAIR NC, a coalition of industry groups that includes State Farm, Allstate and Geico - which rank second, fourth and fifth in market share among the state's auto insurers.

They argue that motorists would fare better if the free-enterprise system were unleashed, enabling insurers to introduce innovative products that are hindered by the current regulatory scheme. The bills also would eliminate a "hidden tax" that about 74 percent of policyholders pay to subsidize the cost of providing liability coverage for "risky drivers," which currently amounts to roughly $15 to $17 for the average auto policy, according to the Insurance Department.

The Insure.com data also shows that North Carolina's rates also have been getting comparatively better. The rates paid by Tar Heel motorists were seventh-lowest in the nation in 2011 and fifth-lowest in 2011, according to the website.

The Insure.com study collected auto rates for 2013 models from six large insurers -- Allstate, Farmers, Geico, Nationwide, Progressive and State Farm -- in 10 ZIP codes in each state. The rates were compiled in December for a single, 40-year-old male with a clean driving record who commutes 12 miles to work each day. Policy limits included $100,000 for injury liability for one person, $300,000 for all injuries and $50,000 for property damage in an accident, plus a $500 deductible on collision and comprehensive coverage.

A newcomer to the ranks of the organizations opposed to overhauling the state's regulatory system is AAA Carolinas, which has 1.8 million members, including 1.4 million in North Carolina.

"Our sense is the system isn't broken," said AAA spokeswoman Angela Vogel Daley.
Daley said that rates for motorists in South Carolina haven't fared as well as North Carolina's rates since South Carolina eliminated its version of the Rate Bureau in 1999. AAA Carolinas sells auto insurance in both states.

Moreover, Daley said, eliminating the subsidies that a majority of motorists pay for the riskier drivers would cause the rates for those risky drivers to skyrocket.

"That will increase the number of uninsured motorists on the road and all of us will be paying more for the uninsured motorists portion of our premium," she said.