Auto insurance is pretty inexpensive in North Carolina, provided you have a spotless driving record. But if you’re among the roughly one in three drivers with some smudges on that record, or if your household tries to add a 16-year-old to a family plan, affordable insurance options dry up pretty quickly.

All of this stems from an overly regulated auto insurance industry that makes it difficult for companies to segment risks and compete. And unless the General Assembly moves to revive a reform bill that was left for dead last summer, the odds are high that lawmakers will close out the 2017-2018 session once again having failed to update the state’s antiquated insurance regulatory system.

The North Carolina Rate Bureau was created in an era when most insurance companies were small and were unable to calculate drivers’ risks. The bureau was supposed to strike a delicate balance by setting rates that were fair to consumers and profitable to insurers. Under this system, the bureau submits its requests to the state’s elected insurance commissioner, who ultimately determines the maximum rates allowable, which all of the state’s insurers must follow. The commissioner also reviews new insurance policies before they can be deployed.

As times have changed, it has become clear the rate bureau — a model that most states abandoned in the 1980s and 1990s and that no other state currently uses for home and auto insurance — is no longer needed. Today, insurance companies are more than capable of running their own risk assessments. Under North Carolina’s system, competition is essentially impossible and cost-saving innovations are strongly discouraged. When inventive policies are presented, the state’s vetting process is long and daunting. That’s why the Tar Heel State was given an F grade and ranked just 49th in the R Street Institute’s 2017 insurance regulation report card.

The system is particularly hard on less-than-perfect drivers. In most states, insurance companies crunch a huge number of data points, from your credit score to your gender to the driving conditions you face in your daily commute, to create rates that are finely tailored to individual drivers. Since the Rate Bureau caps premiums and limits what factors can be used to calculate them, there are some who are simply too risky to justify covering.

These individuals now account for 30 percent of the state’s drivers, whose bodily injury and liability coverage is ceded by their primary insurance company to the North Carolina Reinsurance Facility.

By contrast, the state with the second-largest residual market, Rhode Island, accounts for only about 2.1 percent of that state’s drivers. There are only two other states — Massachusetts and Maryland — with residual pools that are even more than 1 percent.

The Reinsurance Facility subsidizes some of the cost for residual market drivers with a tax on safer drivers, which conveniently isn’t disclosed on those policyholders’ statements. But for many drivers in the pool, the cost of coverage is still higher than it would be in a state with looser underwriting rules. A September 2015 investigation by Consumer Reports found that adding a 16-year-old driver to a family policy caused premiums to jump by an average of 159 percent in North Carolina, the most of any state.

House Bill 43 — introduced in February 2017 by state Reps. Jeff Collins, Justin Burr and Harry Warren — would allow insurers to file alternative plans that don’t match the Rate Bureau’s recommendations that could include “premium differentials among those classes of drivers that may provide for surcharges above and discounts below the rate otherwise charged.” The plans would be submitted to the insurance commissioner for review and would not be eligible for ceding to the Reinsurance Facility.

The bill, unfortunately, was withdrawn from committee consideration last June, but the House Rules Committee has authority to reassign it at any time. The Legislature have the time to act, but will they?

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