You May Pay More for Auto Insurance; N.C. Orders a Rate Cut, but Insurers Can Fight it in Court
Charlotte Observer
October 16, 2002

It's enough to make you want to get out of the car and walk.

Even after North Carolina ordered car insurance rates slashed 17.8 percent this week, premiums could still go up.

And this wouldn't be the first time. On three occasions since 1989, insurers have raised rates while appealing state-ordered reductions. It happened most recently in April, and it could be about to happen again.

This pattern could continue while insurers and state officials press their decade-long disagreement over how auto-insurance rates are calculated.

"I do understand the confusion of someone wondering why (they're) not getting a rate decrease," said David Wood, an insurance professor at Appalachian State University.

Added N.C. Insurance Commissioner Jim Long: "It's not the best system, but it's the one we got."

North Carolina's Rate Bureau, which represents 600 insurance companies, can request rate changes and appeal rate orders from the state. Appeals have taken two to six years to move through the courts.

. . .

Insurers need higher premiums to pay for increased repair and medical costs and jury awards, said John Peterson, executive director of N.C. Insurance News Service. Nationally, the average auto insurance premium will rise 8.5 percent this year and 9 percent in 2003, according to forecasts from the Insurance Information Institute.

Critics say the insurance industry is more financially sound than it's letting on. "They pad their reserves to say they need increases," said Joanne Doroshow, spokeswoman for Americans for Insurance Reform. "They use slippery accounting."

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