CHARLOTTE, N.C. — A law requires extra charges for good drivers in North Carolina to cover risky ones, and some consumer advocacy groups have criticized this system for years.
Now there's a new push to change the system, Eyewitness News Action 9 reporter Jason Stoogenke reported.
Risky drivers include bad drivers but also good drivers who are statistically riskier because of criteria like age and experience.
North Carolina drivers are required to have insurance.
But if the insurance company thinks a driver is too risky, it turns that driver's policy over to the North Carolina Reinsurance Facility. That includes an estimated 2.25 million drivers.
Then the insurance companies charge all drivers, including good ones, extra to cover the at-risk drivers.
Currently, good drivers are being charged 2 percent to almost 5 percent more than they would otherwise have to pay.
Stoogenke asked the head of the facility, Ray Evans, if those extra charges are fair.
He said it was fair and that other states may do it differently, but all insurance boils down to the same thing -- the majority of people pay to cover the few with problems.
"What we all do is kick in a little bit to pay for those that might be really financially harmed by a loss," he said.
Proponents say North Carolina still has competitive rates nationally.
But critics believe North Carolina's system punishes good drivers more than other states.
"As soon as consumers realize and they object to this, the whole gig is up," The American Consumer Institute's Steve Pociask said.
There are concerns that drivers may not know how much they are paying and about transparency.
The law tells companies to include the fee in your premium, not to show it to you separately.
There's a bill to change that which passed the North Carolina House, but Stoogenke was told it may not survive the Senate.
Read more top trending stories on wsoctv.com:
- Violent 72 hours after 12 shot, 5 killed over Labor Day weekend
- 1 killed in fiery crash in front of Carolina Place Mall
- Family mourns after 7-year-old boy shot to death in Charlotte
- 3 killed in plane crash at North Carolina quarry
- Man shot in leg in SW Charlotte is weekend's 12th shooting victim
THE LAW: NCGS 58-37-40:(f) The plan of operation shall provide that every member shall, following payment of any pro rata assessment, begin recoupment of that assessment by way of a surcharge on motor vehicle insurance policies issued by the member or through the Facility until the assessment has been recouped. Any surcharge under this subsection or under subsection (e) of this section shall be a percentage of premium adopted by the Board of Governors of the Facility; and the charges determined on the basis of the surcharge shall be combined with and displayed as a part of the applicable premium charges. Recoupment of losses sustained by the Facility since September 1, 1977, with respect to nonfleet private passenger motor vehicles may be made only by surcharging nonfleet private passenger motor vehicle insurance policies. If the amount collected during the period of surcharge exceeds assessments paid by the member to the Facility, the member shall pay over the excess to the Facility on a date specified by the Board of Governors. If the amount collected during the period of surcharge is less than the assessments paid by the member to the Facility, the Facility shall pay the difference to the member. Except as otherwise provided in this Article, the amount of recoupment shall not be considered or treated as a rate or premium for any purpose. The Board of Governors shall adopt and implement a plan for compensation of agents of Facility members when recoupment surcharges are imposed; that compensation shall not exceed the compensation or commission rate normally paid to the agent for the issuance or renewal of the automobile liability policy issued through the North Carolina Reinsurance Facility affected by the surcharge. However, the surcharge shall include an amount necessary to recover the amount of the assessment to member companies and the compensation paid by each member, under this section, to agents.
SEE THE LAW AND PROPOSED CHANGE HERE:
SECTION 1. G.S. 58-37-40(f) reads as rewritten:
"(f) The plan of operation shall provide that every member shall, following payment of any pro rata assessment, begin recoupment of that assessment by way of a surcharge on motor vehicle insurance policies issued by the member or through the Facility until the assessment has been recouped. Any surcharge under this subsection or under subsection (e) of this section shall be a percentage of premium adopted by the Board of Governors of the Facility; and the charges determined on the basis of the surcharge shall be combined with and displayed as a part of the applicable premium charges. itemized and displayed to the policyholder at the time of policy issuance and renewal on the declaration page or renewal notice approved by the Commissioner below the coverage and premium information only as follows:
WSOC
