SB 477 ELIMINATES SURCHARGE PAID BY DRIVERS
FOR IMMEDIATE RELEASE
CONTACT: Jennifer Cohen, Executive Director
April 13, 2011
(919)834-9773
Jennifer.Cohen@insurancefederationnc.com
SB 477 ELIMINATES SURCHARGE PAID BY DRIVERS
RALEIGH, NC – During his 2008 campaign and since he tookoffice, Insurance Commissioner Wayne Goodwin has correctly pointed out thatthere are too many drivers in North Carolina’s high-risk automobile insurancepool.
Senate Bill 477 would gradually reduce the size of that pooland eliminate a hidden surcharge paid by allNorth Carolina drivers.
North-Carolina’s high-risk pool, known as the N.C.Reinsurance Facility, includes almost 1.4 million drivers. That’s 20 percent of the state’s drivers –more drivers than are insured in all other states’ high-risk pools combined. North Carolina drivers account for more than80 percent of the drivers in the country who are assigned to high-riskpools. We don’t think 80 percent of thenation’s bad drivers are North Carolinians.
The Insurance Federation of North Carolina – an associationof the largest property and casualty insurers who do business in the state –backs Senate Bill 477, which would gradually remove drivers from this high-riskpool and allow them to be insured by the company they choose.
Over time, SB477 also would eliminate a surcharge paid by all North Carolina drivers to cover the annual shortfall attributedto drivers in the Reinsurance Facility who are known as “clean risks.” Though this “clean risk” surcharge is notdisclosed to drivers, it averages 5-7 percent of a driver’s premium and hasranged as high as 10 percent.
Under SB477, as the 1.4 million drivers gradually move fromthe Reinsurance Facility to private insurers over five years, this surchargewould diminish and eventually be eliminated. This means auto rates would no longer include the 5-7 percent surcharge– and 85 percent of North Carolina drivers would no longer subsidize thesehigher-risk drivers.
Senate Bill 477 is a simple approach that does exactly whatCommissioner Goodwin says needs to be done: Reduce the size of the Reinsurance Facility in a measured way. IFNCrepresentatives had numerous meetings with Commissioner Goodwin to develop aproposal that is fair to consumers. Senate Bill 477 is simply an attemptto address a flawed system that costs North Carolinians money every year.
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