Outdated Insurance System
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Did you know, in just five years, North Carolina consumers have paid nearly $900 million to subsidize the losses of high risk drivers? Why? The answer lies in the outdated and noncompetitive system North Carolina uses to establish automobile insurance rates.
By law, the N.C. rate bureau is directed to engage in what amounts to government price-fixing of auto insurance rates, causing the best drivers to lose the best discounts and stifling competition. In fact, current government rate caps shield high risk drivers from the financial consequences of their actions. This system, which has been abandoned by every state except North Carolina, also adds additional bureaucracy and related costs to insurance pricing.
It’s time for the change in North Carolina — time to recognize that competition and consumer choice is the best regulator of price. It’s time to eliminate government rate caps which result in surcharges paid by North Carolina drivers, surcharges that reward higher risk drivers and encourage risky driving behavior. In today’s environment, where every penny counts, North Carolina’s good drivers deserve better.
It’s time we have a free market auto rating system in North Carolina. Why is North Carolina the only state in the nation that mandates how companies charge drivers for car insurance? The current system forces good drivers to pay more so bad drivers can pay less for their car insurance.
I applaud the dedication of our elected officials to do the right thing for North Carolina auto insurance with giving companies more flexibility and consumers more options.
Jim Leach
State Farm Insurance
Pinehurst
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Comments
JimHeim 2 months ago
North Carolina is #48 in automobile insurance rates in the nation. Only Iowa and Maine are cheaper. In Louisiana (the most expensive), rates are nearly triple.
I'm sure the author has only the purest of motives in mind, but I'm happy to pay less for my insurance.
geoffcutler 2 months ago
"It’s time for the change in North Carolina — time to recognize that competition and consumer choice is the best regulator of price." Jim Leach
Usually the case no matter what the service or product. We'll be hearing a lot more of this very statement when OblunderCare fully kicks in. "Affordable Care Act" won't be affordable for those now privately insured, or Uncle Sam
fugitiveguy 2 months ago
I have been with State Farm for about 35 years and have always been happy with their service. However, their television spots over the past few years make me cringe. They need to fire their current ad agency.
geoffcutler 2 months ago
I'm with Nationwide. Like the coverage and service. commercials are terrible. Second only to Progressive's with that idiot woman who's smarter than all the stupid wimpy men. Liberty Mutual has great ads. Say...is it true some super rich Obama groveler owns Progressive? Where's Moon when you need her....
pulledpork 2 months ago
Mr. Cutler observation on PPACA or "Oblundercare" is pretty close. Two scenarios to consider- A single male, 40 years old making $45,000 on an individual Blue Cross plan with a $1000 deductible might find his current premium in the range of $350/month. Let's say he sees a 30% increase 01/01/14 and gets bumped up to $455/month. He gets no subsidy and eats the increase wholly. Let's say he makes $30,000 and his premium is now $455, BUT he will be subsidized 61% of his premium (after completing a 15 page application and verification from the IRS and others) and "wella" his premium drops to $177.45/month. Scenarios like these are what is in store X millions of people. I'm not sure of what the offical definition of "redistribution of wealth" is, but this has to come close. It is too bad PPACA did not have tort reform or incentives for healthy behavior, two things that could drive down costs and make America healthier.
emb6683 2 months ago
Does your Spidey-sense tingle when an insurance agent complains about rate caps on your insurance payments?
" The current system forces good drivers to pay more so bad drivers can pay less for their car insurance."
So what is the insurance industry's plan? Good drivers continue to pay what they are paying, since it is the third lowest in the country, and bad drivers pay way more to increase the insurance company profit.
I'll keep what I have, thanks.
geoffcutler 2 months ago
"By law, the N.C. rate bureau is directed to engage in what amounts to government price-fixing of auto insurance rates, causing the best drivers to lose the best discounts and stifling competition. In fact, current government rate caps shield high risk drivers from the financial consequences of their actions. This system, which has been abandoned by every state except North Carolina, also adds additional bureaucracy and related costs to insurance pricing." Jim Leach
Does my Spidey-sense tingle?
No! Especially if every state but ours has abandoned it.
What's wrong with Jim being able to make more if government wasn't intruding? And why shouldn't the bad drivers pay for their own bad driving?
JimHeim 2 months ago
Hey, let's all reward Jim for being a private businessman with, oh say, $10,000 a year for policies. That would be cool.
geoffcutler 2 months ago
What does that mean?
Thatcher 2 months ago
"What does that mean?" Nothing. Except an inability to understand economics. Cheers!
geoffcutler 2 months ago
Jim, have you ever been in business where you quote a price and the customer says I've got a lower bid? Guess what happens? How about when stores match their competitors lowest price or beat it?
You'll have to forgive Heim, Jim. He's the type of Obama Democrat that doesn't care for free market Capitalism. Wait'll you meet Moon.
Thatcher 2 months ago
I give you the liberals' dream, Cyprus: http://www.guardian.co.uk/business/2013/mar/18/cyprus-bailout-markets. Yes, the government deciding to impose a 10% wealth tax and removing this 10% from folks' bank accounts...savings, checking, who cares. It's the government's money, right? Cheers! (Oh, and there are no repercussions at all, as folks concede they owe the government money.) Cheers!
geoffcutler 2 months ago
Jim, what about Cyprus? Government raiding retirement accounts to pay for its failure. Good way to balance our books? What do you say? Yes...No? You'll hear it here first, folks, from one of our DNC leaders.
Thatcher 2 months ago
This is why folks park after-tax dollars in the Caymans. They are easy to deal with, with no worry that Democrats here will follow Cyprus and try to steal our money. Does anyone here doubt that Obama would try this if given the chance? Cheers!
geoffcutler 2 months ago
Probably already has.
Pappy 2 months ago
Geoff...Did you really think Mr Heim would answer your question...I think by his silence, he already has !!
Thatcher 2 months ago
geoff-- "Probably already has." Well said. JimHeim will confirm this shortly. The Caymans are a beautiful place! Cheers!
JimHeim 2 months ago
Unlike you guys, I have a life and am not always around to see your silly questions.
Regarding Cyprus, any country that cedes their currency to someone else will get what's coming to them. Never will be our problem.
BTW - Cyprus has very lax banking laws and is usually a good place to stash stolen money. That might not be a good idea this week.
For worshipers of insurance cartels, why do you think we are #48 in insurance rates. Do you think it's an accident, or is this state doing something right? Why would you want to see your rates rise? Do you have too much money?
clarabelle 2 months ago
geoffcutler.................... same ol crap - sounds more like afchump each passing day!
I'll bet his panties are still soaked after the November election.
geoffcutler 2 months ago
Sweetheart, are you dumb? There was a gal on here with nothing of use to say like you. Sarah Martin. Remember her?
JBINS 2 months ago
Jim hit the talking points of State Farm. State Farm is working hard to get of our current system that has given us the 7th lowest rates in the nation. State Farm did the same thing in S.C. and now their rates have gone up 23%. THE TRUTH AND FACTS: 1) The Insurance Dept. sets a rate cap for each risk. They want to end this process 2) If the insurance company thinks its to low they can cede the policy to the facility 3) The "Insurance companys" have put over 1 million "clean risk" policies into the facility 4) If State Farm and others succeed in passing SB154 & HB265 every one of the 1 mill will go up 5) They want to be able to change policy forms. In North Carolina all companys have to handle claims the same way. In S.C. every policy is different. Example one company will not give coverage if you rent a car. One company will only give coverage up to the value of your insured vehicle. 6) Does anyone really think insurance companys want to pass a law so they can charge less? 7) Under our current system EVERY COMPANY CAN CHARGE LESS NOW
JimHeim 2 months ago
JBINS - Oh, yeah, we know the insurance companies (being private enterprises) live only to make our lives better. They would never take a single penny that they didn't have to.
We are so lucky to have them looking out for our best interests. Now we just need to get those awful jack-booted thugs in Raleigh to give them free rein to cut our rates even more. I'm just sure that will happen.
JBINS 2 months ago
This is the 3rd year in a row that State Farm and others have tried to do this. It is best that every one goes to www.lowratesnc.com to let your Senator know you are opposed.
AFCHIEF 2 months ago
Clarabelle with nothing but insults again. Either you are 12 or old and disgruntled living alone
DaveyNC 2 months ago
In fact, 0% interest rates here in the US has effectively raided the savings of savers. Had you put $100K in a bank here at the roughly 1% interest rate banks have been paying over the last 5 years, you would have about $105,100. Had you put that same $100K in a Cypress bank, most of which were paying around 4.5% over that same time frame, you would have somewhere around $114K even after the haircut.
Is it any wonder that companies/wealthy individuals don't want to keep money in the US?
Truth is, a lot of money is coming back because we are the least bad house on the block any more. Which also goes a ways towards explaining why our banks pay so little.
drefleury 2 months ago
@ DaveyNC - Exactly... We think we're different from Cyprus, but when the US government lends money to banks at 0%, and then borrows it back from those banks at 2-3%, who do we think is paying that? We have this banking system with TBTF banks, and bonuses going to the directors and managers who caused the crises of which they all think they deserve to be bailed from underneath. It really is ridiculous... As for the insurance rate structure in NC, and the actual topic of this thread, the problem with letting the free market allow prices for risky people to climb is that then your own insurance company has to pay the claim because the high-risk drivers will opt not to get insurance, and hit you as an uninsured motorist. So either they do it the way they're doing it, or leave much more "risk" in the system in the form of low-risk drivers having uninsured motorist claims filed from damage caused by high-risk drivers. This system is better because it does get more premiums into the pool, and then they usually only sell the high-risk drivers the minimum 30K policies required under the Financial Protection Act. Insurance companies do not like unknown risk. So everyone on this board should bump their polices up, and also include MedPay.
JimHeim 2 months ago
Any mention of the situation in Cyprus is stupid. They have problems in the Eurozone. We will never have that problem. End of story.
geoffcutler 2 months ago
End of story? Jim, with you on America's side, we'll be behind Cyprus in two shakes of a lamb's tail. You'd be funny if you weren't so dangerous.
dentman65 2 months ago
As the owner of a bodyshop in this county I can advise everyone to please take out your policy and read it well. Many people have no idea of what coverage they have until it is too late. I have seen many break out into tears in my office when they find out they are not covered for this or that. With the illegal drivers out there in force with no license or insurance you'd better make sure you are protected. Unless you own 5 cars make sure you have a quality rental car coverage. Make sure your policy protects you well if you are hit by someone with no insurance and that it has a ryder to cover your medical bills in this instance. I have seen many lawsuits over this. There is a clause somewhere in the insurance industry called contributory negligence, which can release your insurance carrier from paying your claim. . If it is determined that it was the equal fault of both drivers you could end up getting stuck. Be aware that there may be waiver in your policy that the insurance company does not have to put factory parts on your vehicle, and we have to install chinese after-market parts on your new Ford. Also be leary of these "Blue Ribbon Shops" or "PDR" which means preferred direct repair shops. Insurance companines tend to "Steer" customers to these shops because the companies get parts and labor discounts for sending the shops work. "Steering" is against the law in NC and was signed into law by during the last term of Governor Hunt. While many of these PDR shops do fine work some may not. They tend to work for the insurance company's interests instead of the customer's best interest. It is your insurance and your vehicle. You have the right to take your car to any repair facility you choose. Don't let them scare you by saying there will be no warranty or the work will be bad, that too is illegal in NC. Be aware of what coverage you have and look out for yourself because no-one else will in this world. Check references of shops and check places like Angie's list. As far as getting the best rates for auto insurance, always remember if you go for the cheapest when you start, you will end up with cheapest when you need them the most.
JimHeim 2 months ago
Thank you, dentman65. It's good to get advice from someone with experience.
drefleury 2 months ago
@Jim Heim: The IMF and the EU came together to form the Cyprus bank money grab, and they are headquartered in DC, and the US holds the largest share of voting rights of all the members by more than double the second place share (Japan). How can you realistically say that won't happen here? It already did. The US banks were bailed out exactly the same way, but the cash grab was from Quantitative Easing... remember that? QE1, QE2, QE3, etc. The US government bought bad, securitized mortgages for completely inflated prices. At the same time we were lending money to banks at basically zero interest, so adding in for inflation, we are PAYING banks to borrow money. That loss is to the tax base and taxpayers. Cyprus doesn't have a big enough government to float that type of scam, so the IMF suggested they take the money on deposit in the form of a tax. But guess what? Bond holders, stock holders, etc., are asked to pay nothing. The people who had actual dollars are being penalized while the people who are gambling are not. I often agree with you on these message boards, but saying the Cyprus problems can never happen here ignores recent history.
drefleury 2 months ago
@Dentman - So true... In fact, we are one of four states in the country with this antiquated contributory negligence rule. If you are deemed 1% at fault in a car wreck, you have no right to recover anything for property damage or injuries... Thank your GOP legislators for cowing to the insurance lobby for that one. Time and time again, bills have been introduced to defeat it, but alas, the almighty dollar is too strong for us simple constituents. Insurance companies love NC, we have just about every anti-consumer insurance law there is. Also, there is no third-party bad faith here, so an insurance company can treat you however they want, denying, delaying, whatever, unless you are their policy holder, and often even then.