Earlier today, the General Assembly’s Joint Study Committee on Automobile Insurance Modernization met to consider a proposal to change the way every North Carolinian purchases auto insurance. Currently, those of us who have clean driving records pay a surcharge of 2.7% to fund a risk pool of those who make insurance claims. Thus, us safe drivers are subsidizing bad drivers to the tune of $139 million this year. (In some years, it’s more, some years it’s less).
Sen. Tony Rand as chairman of the committee asked if that was fair for safe drivers to pay higher rates for auto insurance and shouldn’t we just let everyone be judged on their relative risk? "Everybody should pay their own way. I should pay mine and not subsidize everybody else. We should have some relative expectation that you (bad drivers) pay some fair share of the pool."
Basically, his proposal would take one giant step towards deregulating and dramatically increasing competition in the auto insurance market. (Some government insurance actuary stood up and argued that increased competition would increase rates — I haven’t figured that one out yet.)
Naturally, Insurance Commissioner Jim Long was opposed to the proposal.
Will this proposal have legs when the General Assembly reconvenes in a few weeks? I don’t know, but it’s one we’ll sure be watching.
And if we can apply free market economics to auto insurance, can’t we also apply it to other insurance markets — health, homeowners, etc.?