Bill Text: NC H472 | 2013-2014 | Regular Session | Amended
Bill Title: Auto Insurance Rate-making Reform
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2013-04-01 - Ref to the Com on Insurance, if favorable, Commerce and Job Development [H472 Detail]
Download: North_Carolina-2013-H472-Amended.html
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2013
H 1
HOUSE BILL 472
|
Short Title: Auto Insurance Rate‑making Reform. |
(Public) |
|
|
Sponsors: |
Representatives Dockham, Murry, and Wray (Primary Sponsors). For a complete list of Sponsors, refer to the North Carolina General Assembly Web Site. |
|
|
Referred to: |
Insurance, if favorable, Commerce and Job Development. |
|
April 1, 2013
A BILL TO BE ENTITLED
AN ACT to allow insurance companies writing private automobile insurance in north carolina to offer optional program enhancements and to align auto insurance risk and rates in north carolina by allowing the classification of young drivers as a factor in the setting of rates.
The General Assembly of North Carolina enacts:
SECTION 1. Article 36 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58‑36‑43. Private passenger automobile optional program enhancements authorized not altering coverage under Rate Bureau jurisdiction.
(a) Member companies writing private passenger automobile insurance under this Article may incorporate optional enhancements to their automobile programs as an endorsement to an automobile policy issued under this Article if the insurer has filed the proposed enhancement with the Commissioner and if the proposed enhancement is approved by the Commissioner. Any approved optional enhancements shall be considered outside the authority of the Rate Bureau. If the proposed enhancement will include an additional premium charge, the proposed premium charge shall be included with the proposed program enhancements filed with the Commissioner. The Commissioner shall review the proposed premium charges to ensure that they are based on sound actuarial principles. Amendments to private passenger automobile program enhancements are subject to the same requirements as initial filings. Neither the acceptance, renewal of a policy, nor any underwriting rating criteria shall be conditioned by a company upon the acceptance by the policyholder of any optional automobile enhancements. A rate amendment authorized by this section is not a rate deviation and is not subject to the requirements for rate deviations set forth in G.S. 58‑36‑30(a).
(b) Any premiums, expenses, or losses associated with individual company automobile program enhancements shall not be submitted by the member companies to their statistical organization for inclusion with the data required by the Rate Bureau for rate-making purposes. Insurers shall utilize a statistical code for reporting premiums and losses resulting from program enhancements filed under this section and shall advise the Department as to the location in the annual statement where this code will be reported."
SECTION 2. G.S. 58‑3‑25 reads as rewritten:
"§ 58‑3‑25. Discriminatory practices prohibited.
(a) Except as specified in G.S. 58‑36‑65
and G.S. 58‑37‑35, No no insurer shall after
September 1, 1975, base any standard or rating plan for private passenger
automobiles or motorcycles, in whole or in part, directly or indirectly, upon
the age or sex of the persons insured."
SECTION 3. G.S. 58‑36‑65 reads as rewritten:
"§ 58‑36‑65. Classifications and Safe Driver Incentive Plan for nonfleet private passenger motor vehicle insurance.
(a) The Bureau shall file, subject to review, modification, and promulgation by the Commissioner, such rate classifications, schedules, or rules that the Commissioner deems to be desirable and equitable to classify drivers of nonfleet private passenger motor vehicles for insurance purposes. Subsequently, the Commissioner may require the Bureau to file modifications of the classifications, schedules, or rules. If the Bureau does not file the modifications within a reasonable time, the Commissioner may promulgate the modifications. In promulgating or modifying these classifications, schedules, or rules, the Commissioner may give consideration to the following:
(1) Uses of vehicles, including without limitation to farm use, pleasure use, driving to and from work, and business use;
(2) Principal and occasional operation of vehicles;
(3) Years of driving experience of insureds asWhether
any licensed drivers;drivers are under 19 years of age;
(4) The characteristics of vehicles; or
(5) Any other factors, not in conflict with any law, deemed by the Commissioner to be appropriate.
…
(g) If an applicant for the issuance or renewal of a
nonfleet private passenger motor vehicle insurance policy knowingly makes a
material misrepresentation of the years of driving experienceas to
whether the applicant is 19 years of age or older or as to the
driving record of any named insured or of any other operator who resides in the
same household and who customarily operates a motor vehicle to be insured under
the policy, the insurer may:
(1) Cancel or refuse to renew the policy;
(2) Surcharge the policy in accordance with rules to be adopted by the Bureau and approved by the Commissioner; or
(3) Recover from the applicant the appropriate amount of premium or surcharge that would have been collected by the insurer had the applicant furnished the correct information.
(h) If an insured disputes his insurer's determination that the operator of an insured vehicle was at fault in an accident, such dispute shall be resolved pursuant to G.S. 58‑36‑1(2), unless there has been an adjudication or admission of negligence of such operator.
(i) As used in this section, "conviction" means a conviction as defined in G.S. 20‑279.1 and means an infraction as defined in G.S. 14‑3.1.
(j) Subclassification plan surcharges shall be applied to a policy for a period of not less nor more than three policy years.
(k) The subclassification plan may provide for premium
surcharges for insureds having less than three years' driving experience as
licensed drivers.who are less than 19 years old.
(l) Except as provided in this section and G.S. 58‑36‑30(d), no classification or subclassification plan for nonfleet private passenger motor vehicle insurance shall be based, in whole or in part, directly or indirectly, upon the age or gender of insureds.
(m) Notwithstanding any other provision of law, with respect to motorcycle insurance under the jurisdiction of the Bureau, any member of the Bureau may apply for and use in this State, subject to the Commissioner's approval, a downward deviation in the rates of insureds who show proof of satisfactory completion of the Motorcycle Safety Instruction Program or a comparable motorcycle safety program provided by federally certified instructors for members of the military."
SECTION 4. G.S. 58‑37‑35 reads as rewritten:
"§ 58‑37‑35. The Facility; functions; administration.
…
(l) The classifications, rules, rates, rating plans
and policy forms used on motor vehicle insurance policies reinsured by the
Facility may be made by the Facility or by any licensed or statutory
statistical organization or bureau on its behalf and shall be filed with the
Commissioner. The Board of Governors shall establish a separate
subclassification within the Facility for "clean risks". For the
purpose of this Article, a "clean risk" is any owner of a nonfleet
private passenger motor vehicle as defined in G.S. 58‑40‑10,
if the owner, principal operator, and each licensed operator in the owner's
household have two years' driving experience as licensed driversare
18 years of age or older and if none of the persons has been assigned any
Safe Driver Incentive Plan points under Article 36 of this Chapter during the
three‑year period immediately preceding either (i) the date of
application for a motor vehicle insurance policy or (ii) the date of
preparation of a renewal of a motor vehicle insurance policy. The filings may
incorporate by reference any other material on file with the Commissioner.
Rates shall be neither excessive, inadequate nor unfairly discriminatory. If
the Commissioner finds, after a hearing, that a rate is either excessive,
inadequate or unfairly discriminatory, the Commissioner shall issue an order
specifying in what respect it is deficient and stating when, within a
reasonable period thereafter, the rate is no longer effective. The order is
subject to judicial review as set out in Article 2 of this Chapter. Pending
judicial review of said order, the filed classification plan and the filed rates
may be used, charged and collected in the same manner as set out in G.S. 58‑40‑45
of this Chapter. The order shall not affect any contract or policy made or
issued before the expiration of the period set forth in the order. All rates
shall be on an actuarially sound basis and shall be calculated, insofar as is
possible, to produce neither a profit nor a loss. However, the rates made by or
on behalf of the Facility with respect to "clean risks" shall not
exceed the rates charged "clean risks" who are not reinsured in the
Facility. The difference between the actual rate charged and the actuarially
sound and self‑supporting rates for "clean risks" reinsured in
the Facility may be recouped in similar manner as assessments under G.S. 58‑37‑40(f).
Rates shall not include any factor for underwriting profit on Facility
business, but shall provide an allowance for contingencies. There shall be a
strong presumption that the rates and premiums for the business of the Facility
are neither unreasonable nor excessive.
(m) In addition to annual premiums, the rules of the Facility shall allow semiannual and quarterly premium terms."
SECTION 5. This act becomes effective July 1, 2013, and applies to policies issued or renewed after that date.
