Mike Causey: Insurance rate system protects NC consumers

There's been a lot of talk lately about North Carolina's insurance rates and how they're set, especially since the insurance companies have asked for an average 42.2% increase in homeowner insurance rates.

North Carolina is unique in how it sets insurance rates for the most common types of consumer insurance, including home and automobile insurance policies. The General Assembly, decades ago, decided against having individual companies file their rates for these common types of insurance directly with the Department of Insurance.

Instead, lawmakers opted to set up the N.C. Rate Bureau, which is not a part of the Department of Insurance, to represent the interests of all insurance companies writing such common types of policies in the state, with the Rate Bureau collectively filing proposed rates based on information from its members. The Rate Bureau's filings are then subject to the commissioner's review.

Some have advocated for change in the Rate Bureau system, suggesting that making such a change could result in lower insurance premiums for North Carolinians. For example, a majority of states permit home and automobile insurers to file new rates with the insurance regulators and then begin charging those new rates immediately, without the regulators' prior approval.

I'm always looking for ways to make things better, to help North Carolina consumers get value for their insurance premium dollar. I want to make sure any modifications to the way insurance rates are set accomplish at least these two things: One, they provide a fair premium for North Carolina consumers and, two, they provide a robust insurance market so North Carolinians can have choices of insurance products.

I believe that our current Rate Bureau system achieves these goals and provides better protection for consumers than those in states where insurers can simply file and use their new rates without prior approval. As set out in our state law, once the Department of Insurance receives the filing from the Rate Bureau the process of reviewing the request and making an eventual decision on the filing begins.

The department sends out a news release statewide announcing the Rate Bureau's filing and informing residents of how they can comment on the proposal. This allows consumers to email comments or send them through the postal service. In the case of homeowner rate requests, there is also an in-person public hearing which, in recent years, has included an option for consumers to participate virtually.

Within 50 days of the filing, the commissioner must decide to either allow Rate Bureau's proposed increases to take effect or to reject them and set a hearing date on proposed rates. Thus far, I have rejected the Rate Bureau's homeowner insurance rate increase filing every time.

In the meantime, my team of actuaries, lawyers, accountants and other insurance experts pore over thousands of pages of data provided by the Rate Bureau to see what increases may be justified and what increases are not justified.

Once we get a clear understanding of the data, we can then enter negotiations with the Rate Bureau and work to settle on a rate that is significantly lower than the proposed increase. However, if no negotiation is possible, I will proceed with the scheduled hearing, where the department's experts and attorneys argue before a hearing officer for rates lower than those the Rate Bureau has requested.

While I like to avoid protracted legal proceedings if I can, I won't hesitate to hold a hearing if that's necessary to make sure consumers get a fair price.