Insurance Controls Don't Need Fixing
Just once, wouldn’t it be refreshing if Raleigh’s newly ascendant Republicans would push something that actually helped the little guy instead of further enriching big corporations?
There is certainly no change of that pattern to be found in the bills now before the state legislature to modify or eliminate regulation of auto insurance rates.
Oh, the sponsors gussie up these proposed changes by making it sound as if the medicine they’re prescribing would be good for you. It would “modernize” things. It would make them more “competitive.” Surely modern is good, and who can argue against the salutory effects of competition?
Enough window-dressing. The purpose of the proposed legislation is clear: to clip the regulatory wings of North Carolina’s insurance commissioner, thus removing or relaxing some of those pesky controls that restrict the freedom of the insurance companies to do business as they see fit when it comes to things like — oh, raising your rates.
‘They Want More of Your Money’
The state’s elected insurance commissioner, Democrat Wayne Goodwin, describes the situation in pretty stark terms. “The bottom line,” he says, “is this: The insurance companies want more of your money. These proposals would no doubt lead to higher car insurance premiums.” The industry wouldn’t be having its lobbyists press so hard for these changes, he says, if it weren’t for all the dollar signs in its eyes.
The insurance companies argue that the current law runs counter to a general deregulatory mood in the nation, and they may have a point. North Carolina is the only state that still requires auto insurers to file an industry-wide request to change rates. In 2006, for example, the insurers wanted an increase of 7.4 percent but ended up getting 2.9 percent.
These controls routinely keep rates in North Carolina among the nation’s lowest, according to the National Association of Insurance Commissioners — and the lowest in the South.
Companies Still Flock Here
Do North Carolina’s insurance rules amount to some kind of socialistic policy? Hardly. Do they restrain free trade so severely as to discourage insurance companies from doing business here? No. At last report, more than 150 of them were writing policies in this state, suggesting it’s a good place to do business.
Indeed, one of the biggest insurance companies, Nationwide, went public this week with a statement that North Carolina’s regulatory policy works very well, and that no revamp is necessary. In other words, according to that company (which really may be “on your side,” as the commercials say), the current system isn’t broke and doesn’t need fixing.
GOP advocates of rate-setting “reforms” also want to junk the current surcharge that drivers pay to help finance liability coverage provided by the N.C. Reinsurance Facility. They argue that this causes the majority of drivers to pay extra to subsidize the rates of a minority.
Wait. Now we’re saying rates are too high?
Opponents of the proposed changes wonder if those agitating for them are just doing the bidding of an industry that tends to favor them with campaign support. We don’t know. There may be more noble motivations here, but they are not readily evident.
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