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North Carolina Insurance Commissioner Jim Long has signed an order requiring a 16.1 percent reduction in private passenger auto rates and a 11.7 percent reduction in motorcycle liability rates, effective Jan. 1.

“After listening to testimony from both sides during the rate hearings in July and August, I found that the Rate Bureau’s request for a 12.9 percent increase just wasn’t warranted,” Long said. “It’s the largest increase they’ve requested in almost 15 years. I was surprised by the request, especially since last year the Bureau filed for no change.”

During the hearings, the Insurance Department’s attorney argued that the market for auto insurance had not changed significantly since last year, when companies did not seek a rate increase.

Rate experts with the department said the Rate Bureau employed faulty calculations when determining the proposed rate increase, according to a news release from Long’s office.

For example, the Bureau filing included claims arising from the North Carolina Reinsurance Facility — an entity which insures riskier drivers — even though bureau rates do not apply to those drivers. In fact, the Reinsurance Facility files a separate rate proposals using its own claims data, the news release said.

Long ultimately agreed with department experts that the bureau filing presented a skewed picture of the marketplace.

Under state law, the insurance commissioner sets the maximum allowable rate that auto insurance companies can charge in North Carolina. Companies can and regularly do offer discounts to their policyholders. If the bureau chooses to appeal Long’s order, they can do so through the court system.

Companies can then raise rates while awaiting the appeals decision, and the difference in the ordered rate and the implemented rate must be held in escrow. If the bureau loses its appeal, the escrowed money plus interest must be refunded to policyholders.

Since taking office, Long said he has consistently ruled for small or no rate increases and in many cases has ordered rate decreases. Combined, these rulings have potentially saved drivers an estimated $5.7 billion, according to the news release.

North Carolina currently has the 6th lowest auto insurance rates in the nation.

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