Policy Studies Insurance

Spotlight on NC’s auto insurance system: Seven things to understand

Authored by R Street Senior Fellows R.J. Lehmann and Alan Smith, this paper outlines how the North Carolina Rate Bureau works and how it stifles competition and innovation. Among the key facts it highlights:

  • North Carolina’s automobile insurance system guarantees profits to insurers.
  • North Carolina’s current system makes it difficult—and undesirable—for insurers to offer innovative new products in the state.
  • Residents across the Southeast states pay relatively low rates for automobile insurance.
  • North Carolina’s automobile insurance system imposes a special tax on all drivers in order to subsidize coverage for risky drivers.
  • More than a fifth of North Carolina drivers cannot find a private insurer willing to write them liability coverage.
  • State regulation does not keep auto insurance rates in North Carolina lower than those in other states.
  • Currently pending legislation still gives the insurance commissioner authority over most rate requests and would not result in significant short-term rate increases for anybody.

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