The NC Insurance Department has finally come to an agreement with the Insurance Companies selling auto insurance in NC  to settle their differences on the 2008 rate changes that applied to auto insurance and motorcycle insurance policies.  There are a few things you should know about who will get a refund and when those checks will be mailed.

First of all, this refund affects all auto and motorcycle insurance in NC with policy terms from January 1, 2009 to October 31,2009.  In most cases, checks will be issued only if your refund due plus interest is greater than $5.00.  You should receive an explanatory memo with your refund check.  If you are due a check for more than one policy term, then most companies will combine all of those into one check.  Companies will be mailing out checks between either the May1 – July 31 time window or the November 2010 and January 2011 time window.  The timing here will depend on whether that company was writing 6 month auto policies, or 1 year auto policies or both.  Interest will be added to the checks through October 31, 2010.  The total amount of the refunds will be more than $50 million.

These refunds are the result of a dispute between the N.C. Department of Insurance and the N.C. Rate Bureau (NCRB) over rates ordered in 2008. During the appeals process, the NCRB implemented an interim 9.4 percent rate increase that went into effect on Jan.1, 2009. In cases where insurance companies charged policyholders more than the rates determined by the 2009 settlement, insurance companies are required by statute to refund the difference between the rates charged and the settled rates, with interest.

The 2009 auto settlement did away with the NCRB's implemented 9.4 percent 2008 rate increase and denied their 2009 request for an additional 1.4 percent rate increase and included an additional 0.5 percent decrease. Under the settlement, the NCRB may not file changes to auto rates until 2011, which means that the maximum allowable auto rates are locked in until Oct. 1, 2011 at the earliest.

The NC House is now considering a tort reform bill that could dramatically increase the amount you spend on your auto insurance policy as well as on your home insurance policy and business insurance policies.  The reason this bill is so bad for your insurance rates is that it aims to change our current law of contributory negligence to one of comparative fault. 

So what does this mean?  Well, with our current laws, if you contribute in any way to the accident that causes damages, then you cannot recover these damages from the other party.  Comparative fault permits a plaintiff to recover from a defendant if his negligence does not exceed that of the defendant.  Now, if we adopt comparative negligence as our state law, then as you can imagine, more claims are going to have to be handled by the court systems because now we have to determine who had the most fault in any accident or event as opposed to saying both parties were somewhat at fault so everyone settles their own claim with their own insurance company.  And as you can imagine, having all of these claims settled by our court system will slow down the claims and increase the costs of the claims.  And you don’t have to be a rocket scientist to know that those costs are going to be passed down to the consumer.

Here are some of the findings by the IFNC (Insurance Federation of NC) regarding this bill.

It is estimated that this change in the law will increase auto insurance premiums by 3% to 16% right away.  The long term increases in costs could dwarf these numbers.

81% of voters surveyed said that they are opposed to any legislation that increases their taxes or their household expenses.

69% of those polled said the trial attorneys would benefit if the law were changed.

$150 million annually will come out of consumers’ pockets if rates rise just 5% on auto insurance alone.  But this change will increase the costs of all policies that have a liability insurance element.  This includes homeowners insurance and business insurance policies.

A substantial majority of voters believe that under our current system our courts are open and fair for those who have been hurt in an accident or injured on the job.

Actuarial studies show that states with comparative fault systems have higher auto insurance rates than state that use contributory negligence.

Let’s face it, there are two industries that will make more money of this change goes through.  One is trial attorneys and the other is insurance agents.  That’s right, I would personally stand to gain from this decision but I still think it is the wrong decision and I urge you to take action to stop it.  The appropriate step for you to take to oppose this legislation is to write to your State Senator and ask him or her to vote NO on House Bill 813.  For more information or sample letters to send or email to your State Senator, visit Home | Insurance Federation of North Carolina.

At Clinard Insurance Group, in Winston Salem, NC, we want all of our clients to be informed insurance consumers.  We want you to have the information you need to make wise decisions about how to protect your assets.  If we can help you with your auto insurance, your home insurance, or even your business insurance or your life insurance, please call us toll free at 877-687-7557 or visit us on line at ClinardInsurance.com.