Auto Rate Modernization – Is There a Problem??

Some agents have asked us why IIANC is supporting Auto Rate Modernization, and specifically House Bill 265, when there doesn’t seem to be a problem. Good question.

We’ll give in on the first issue. If your agency writes nothing but non-standard auto policies, then you probably have a right to question your Association’s support of HB 265. We understand some of your concern. But in the long run – IIANC’s position makes a lot of sense.

Our mission is to simply  phase out over a five year period,  the “clean risk” subsidy and move the pricing of auto insurance to a more free market system where companies can introduce new, innovative products and insurers can compete more vigorously for the least risky drivers. If we can move to operating in a similar type of system that most other states enjoy, then the prospects appear brighter to seriously look at the property market in the near future. We think tackling the auto rating system is the first step in what can be a long process in correcting the property issue.

The North Carolina Reinsurance Facility (the place where these policies exist) currently has over 1 million drivers in what is supposed to be the “market of last resort”.  That’s more than all other 49 other states combined. In fact, North Carolina’s automobile insurance system imposes a special tax (surcharge) on all drivers in order to subsidize coverage for risky or hard to place drivers. As a result of this surcharge, the least risky drivers – who tend to be older and female – pay more than they do in other states.

GMAC and other companies fighting HB 265 cede much, if not a majority, of their business to the Facility. Basically, they have no risk in the business but simply get paid for servicing the policy. Do Nationwide, GMAC and other companies fighting our bill conduct business in other states that operate in a system that is free market driven and not beholden to bureaucratic red tape – YOU BET THEY DO! So, why can’t that be the norm in North Carolina?

Please call your State Representative today and ask them to support HB 265 by Representative Collins.  Yes – there is a problem.



  1. By james

  2. By kenny