How Are Auto Rates Set in North Carolina


Last night on Nextdoor I noticed a post from a concerned neighbor about auto insurance increasing. The post went on to say the insurance carrier said it was because of a state rate increase.  There was a lot of confusion from other neighbors about what that meant and if it was factual.  I love that consumers want to be educated and understand how rates are set.  Thought you might find my reply valuable as well.

I have been an insurance agent for (gulp) 20 years this month. I am passionate about education so folks can make good decisions for their families. So I wanted to see if I could shed some light on this topic.

The state of North Carolina has a rather complex way of calculating insurance rates. As a consumer, it is important that you have a basic understanding. Insurance is state specific. So, how are auto insurance rates calculated in North Carolina? The simplistic answer (with as much insuranceeze removed as possible) is a base rate is set by the North Carolina Rate Bureau. This is the maximum carriers are allowed to charge. Insurance carriers can then appeal to the NC Rate Bureau to offer discounts for various things and can ask to give consumers unique policy features. The NC Rate Bureau then either approves or denies the discounts and/or policy features. 

Here is a link to some info on the North Carolina Department of Insurance’s website http://www.ncdoi.com/consumer/consumer_r…. 

This essentially keeps rates capped by what the NC Rate Bureau says insurance carriers are allowed to charge. With that explanation in mind I double checked the NC Rate Bureau base rates and found there were increases on 10-1-15 and 3-1-16. If your policy has not renewed since 10-1-15 you are being affected by both base rate increases. The increase on 10-1-15 was the first one since 2004. Wish I could say the same about our health insurance or the cost to repair a bumper but I digress. The insurance carriers we represent did not anticipate a 50% increase however we insure primarily average to above average drivers so there are plenty of discounts our clients are receiving that likely offset the rate increases.

Hope that is helpful. Rate setting is complex but as a consumer I hope this helps you in doing what is best for your family!

Oops – almost forgot here is a link to the North Carolina Rate Bureau. I didn’t find a lot of useful consumer information but in case you would like to do some research http://www.ncrb.org/ncrb/Home/tabid/54/D….

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