New legislation removes rate limitations on auto insurers
New legislation could remove North Carolina’s limits on auto insurance rates. Currently, the state’s insurance companies are required to adhere to rules that place limits on how much they can charge for auto insurance every year. These limits are determined by Insurance Commissioner Wayne Goodwin, along with other regulators, and are meant to provide consumers with some degree of financial protection. The new legislation will change this, allowing insurers to opt out of the current regulatory structure and have more control over their own rates.
Legislation will allow insurers to reward safe drivers
The new legislation is meant to promote safe driving. Insurers will be able to provide safe drivers with significant discounts on their coverage, which will have a major impact on the actual cost of their policies. Drivers that are less safe will see their insurance rates increase. Because there is no longer a limit on rate increases, unsafe drivers could see their rates reach an inordinately high level. The possibility of higher rates is meant to serve as a deterrent to unsafe driving practices.
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Some suggest that the legislation exists only to improve the profits of insurance companies
Those opposing the legislation suggest that it is unneeded. North Carolina is currently home to the sixth-lowest auto insurance rates in the U.S. As such, there may be little need for initiatives that are meant to further reduce rates. Others suggest that the legislation is misleading, claiming that it has nothing to do with providing discounts to drivers and exists solely to allow insurance companies to raise rates on the coverage they offer.
Insurers will still be required to comply with the state’s insurance regulations and work closely with regulators
The legislation is not meant to remove insurers from regulatory liability. Insurance companies operating in the state must still adhere to the state’s regulations. Regulators will continue to monitor auto insurance rates and determine whether or not they require regulatory attention. Insurers must still submit rate increase proposals as well, but will have to do so several times a year rather than once annually.