Insurers ask for less regulation in N.C.

Insurance companies serving North Carolina are pressing for a less-regulated environment for setting automobile- and home-insurance rates, which they say would benefit consumers, according to an advocacy group.

"We need to put politics as far away from rates as possible, basing rates on fair pricing and what the marketplace will bear," Joe Stewart, the executive director of the Insurance Federation of North Carolina, said yesterday.

But Jim Long, the state insurance commissioner, said he doesn't think that the group will make much headway in the General Assembly because the regulatory system works well for consumers.

"I would believe that the adage 'If it ain't broke, don't fix it' will hold true in the General Assembly because you can't show me what's wrong with the current system," Long said.

North Carolina traditionally boasts of having some of the lowest auto-insurance rates in the country, in part because the N.C. Department of Insurance negotiates rates as standardized and across-the-board for all companies. The insurance commissioner sets the rate, which serves as a cap.

The department has not agreed to an increase in auto-insurance rates for at least the past six years. Long has approved just seven rate increases since 1984.

"Insurance companies don't exactly like the state telling them how to do their business," he said. "Many like to complain, but some have figured out how the system works and are making good money here."

Stewart acknowledges that the insurers face an uphill challenge in persuading the General Assembly to approve a less-regulated system because there is no crisis affecting auto and home rates. The group's goal is pursuing incremental regulatory changes.

But he also said that the regulatory system is stifling competition and leading insurers to not offer some innovative products in the state.

For example, Stewart said that Progressive Auto Insurance offers a product in Virginia, but not in North Carolina, that is based on odometer readings. Progressive is offering the product on a pilot basis in selected states, spokeswoman Cristy Cote said.

Stewart said that less regulation would reduce the indirect surcharge that North Carolina homeowners pay to keep home insurance in the coastal areas more affordable. Insurers would be able to charge a higher rate in the coastal areas because of the higher risk of storm damage, and charge a lower rate in other regions.

Long said that there is plenty of "fierce competition" for auto insurance, with about 175 companies operating in the state and "more wanting to come in every day." He said that there is no shortage of insurers wanting to provide home insurance.

"Because of the maximum rate, companies are coming up with more creative products, based on age, use of the automobile, years with the insurer and so on to differentiate themselves," Long said.

Members of the General Assembly contacted yesterday said they have not felt a ground-swell of support from constituents to loosen the regulations covering insurers.

"At this point, to change the current system, it would have to be matter of sensitivity of consumers not feeling they are getting a fair shake," said Sen. Pete Brunstetter, R-Forsyth. "I haven't felt that yet."

Rep. Bill McGee, R-Forsyth, said that legislators should always be willing to consider ways to help businesses do better business in the state.

"But not at the expense of negatively affecting consumers," McGee said. "The status quo appears to be working pretty well in property and casualty insurance in North Carolina."

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By Richard Craver
JOURNAL REPORTER

Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.

© 2006 Winston-Salem Journal.