INDIANAPOLIS (Aug. 15, 2007) – The National Association of Mutual Insurance Companies (NAMIC) pledged to continue its efforts to modernize North Carolina’s insurance regulatory system in the 2008 legislative session. NAMIC’s comments came as the 2007 session ended without passage of rate modernization legislation.
“NAMIC was disappointed that, in failing to pass a legislative studies bill, the General Assembly also failed to create a proposed commission to analyze and make modernization recommendations to North Carolina’s auto insurance regulatory system,” said Liz Reynolds, NAMIC’s state affairs manager for the southeast region. “We will continue to work with legislative leaders and our advocacy partner, the Insurance Federation of North Carolina, to pursue meaningful reform.”
One bill, S900, which did pass the Senate, would require insurers to disclose to consumers the degree to which the current system requires them to subsidize drivers in the state’s high-risk auto insurance pool, Reynolds explained. Under current law, a recoupment surcharge is assessed on all auto liability policies to cover losses from accidents caused by motorists whose liability coverage is in the Reinsurance Facility. This legislation may be considered by a House panel in 2008.
A companion modernization bill, S901, would have established an impartial appointed judge to preside over rate disputes between the industry and regulators, and allowed greater flexibility for auto liability rates to help diminish the size of the state’s auto insurance residual market, which is currently nearly 30 percent of the total market. Legislative sponsors of the bill proposed to study the issue further before advancing specific modernization legislation.
However, the bill containing all proposed legislative studies, S1256, which included an auto insurance regulatory modernization study, did not pass.
Despite the failure to pass the legislation, insurers were somewhat encouraged by the session. “This session did see the start of a legislative conversation on how modernization is needed to ensure consumers get the best possible coverage and premium options that an open-market system has to offer, and we count that as a success in and of itself,” said Joe Stewart, executive director of IFNC.
Insurers got some favorable votes out of the legislative session, with the passage of S925, which makes speeding violations in excess of 25 mph above the speed limit ineligible for downgraded punishments. “The current system has allowed drivers who exhibit high-risk behaviors to avoid responsibility,” Reynolds said. “Some judges have downgraded driving convictions, allowing riskier drivers to avoid the high fines and reports on their driving records.”
Reynolds said the fact that this loophole in the law has been allowed is further evidence of the need to study the entire auto insurance regulatory system.
The insurance industry worked closely with the state’s insurance department to ensure that H 729, which addresses auto insurance rate evasion, would not place an undue burden on insurers and their agents.
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Posted: Wednesday, August 15, 2007 12:00:00 AM. Modified: Wednesday, August 15, 2007 3:50:42 PM.
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