North Carolina auto insurers were allowed to increase the premium caps in that state by up to 9.4 percent effective January 1st, but a court ruling may prevent them from actually receiving any extra money.
The North Carolina Rate Bureau, which represents almost 150 car insurers operating in the state, asked for its largest rate increase in 14 years – 12.9 percent – but Insurance Commissioner Jim Long instead ordered a 16 percent cut.
Long's ruling said that the data submitted to support the insurers' position did not justify their requested increase, and the Insurance Department also said that the companies in question were inaccurate in their depiction of North Carolina's auto insurance market, including claims from inexperienced high-risk drivers or those who racked up insurance points against their licenses – drivers who are assigned to the North Carolina Reinsurance Facility (a form of pool insurance) and not part of the general driving populace.
responded by reducing their requested rate-cap increase to 9.4 percent, according to Rate Bureau general manager Ray Evans.
Under state law, the higher rate could be charged as of the first of the year, but any monies collected in excess of the 16 percent cut ordered by Long must be put into escrow accounts. If the insurers win the appeal for their increase, they'll keep the money; if not, it must be refunded to policy holders, with interest (prime plus three percent) .
Bob Mack, deputy state insurance commissioner for property and casualty said, "The commissioner ordered what he felt was appropriate. We'll let the appeals process run its due course."
As of December 31st, a court hearing on the insurance companies' appeal had not been scheduled.
