By David Ranii
Senate Majority Leader Tony Rand has postponed his effort to overhaul
the way auto insurance rates are set for North Carolina drivers.
Rand
said Tuesday that he has instead decided to create a study commission
to devise a more comprehensive approach that would encompass issues
that weren't included in the bill he introduced in March. The goal, he
said, would be to come up with a new system the legislature could
consider next year.
"I
think what we're going to do is do a study of the whole area --
driver's license points, insurance points, any kind of surcharge, the
reinsurance pool, the whole rate-making system," said Rand, a Democrat.
Rand
had been pushing a bill backed by insurance companies that called for
stripping the state insurance commissioner's authority to set auto
rates. Instead, the bill would have given the authority to rule on rate
disputes between insurers and the state insurance department to a
Superior Court judge.
That
proposal aroused the ire of consumer groups as well as Insurance
Commissioner Jim Long, who argued that the change would mean higher
rates for consumers. The Insurance Department boasts that the state's
auto insurance rates are the fifth- or sixth-lowest in the nation,
depending on the standard of comparison.
Rob
Thompson, advocate at the N.C. Public Interest Research Group, called
Rand's decision "a reflection of Senate members not wanting to vote for
a bill that is wildly unpopular with the public. Several different
consumer advocacy groups have said that bill is bad for consumers."
Rand,
however, said his decision had nothing to do with how much support --
or opposition -- the bill had. "It's not a game to see who wins and who
loses," he said. "It's a question of what is the best thing to do."
Joe
Stewart, executive director of the Insurance Federation of North
Carolina, which represents property and casualty insurers, said his
group supported Rand's decision.
Insurance Department spokeswoman Chrissy Pearson couldn't be reached for comment.
Rand's
bill originally called for stripping the commissioner's authority to
set rates on homeowners and workers' compensation insurance as well as
auto insurance. But Rand said Tuesday that he had decided a while ago
to limit its scope to auto rates.
"The other is working OK," he said. "I don't have any problem with that."
Rand
said that Long, or whomever he designated, and insurance industry
executives would be invited to participate in the study commission.
"We will get all the advocates in the room to make sure everybody has their say and gets a good look at it," he said.
Under
the current system, the N.C. Rate Bureau, which represents insurers,
proposes adjustments to the maximum rates auto insurers can charge.
Insurance department staffers review the data filed by the bureau and
negotiate. If no agreement is reached, the insurance commissioner holds
hearings and decides the rate. The companies have the right to appeal
the decision in the state courts.
That
system, which exists in only a handful of states, puts the commissioner
in the roles of judge, jury and consumer advocate, said State Farm
Insurance spokeswoman Courtney Lowe. "It doesn't look very balanced,"
she said.
The
bill also required the commissioner to prove that the rate sought by
insurers is "excessive, inadequate or unfairly discriminatory."
That
would have reversed the burden of proof, which currently rests on the
Rate Bureau to prove that the rates it seeks on the companies' behalf
are justified.
"It
should not be the job of the insurance commissioner to prove the
industry's rates are unfair," said Thompson. "The burden of proof
should be on the industry itself."
