Why N.C. car insurance rates are the lowest in the nation
Published April 29, 2015
Editorial by Eric Frazier, The Charlotte Observer, April 29, 2015.
Government is pretty distrusted these days, but here in North Carolina, motorists of all political stripes can rightfully sing the praises of Insurance Commissioner Wayne Goodwin and the N.C. Department of Insurance, the state officials responsible for capping what insurance companies can charge for auto insurance.
According to a new study from consumer finance site insuranceQuote.com and Quadrant Information Services, North Carolina is the least expensive state in the country to buy car insurance.
North Carolina residents pay about 41 percent less annually for auto insurance than the national average of $811, the study found. (In Mecklenburg and Gaston, though, customers pay 7 percent and 6 percent higher, respectively, than the state average).
Idaho, Iowa, Wisconsin and Maine round out the top five for cheapest premiums.
At the other end of the spectrum, Michigan, Rhode Island, New York, Delaware and Louisiana had the highest rates, the study found.
Why are North Carolina’s rates so low? The study cited three reasons:
? It’s a mostly rural state, which means less crime, cheaper cost of living and fewer accidents, all of which drives insurance rates lower.
? Goodwin is empowered to cap car insurance rates. Insurance firms compete by offering discounts below the established cap.
? Because of this intense competition, more than 2,000 different auto insurance discounts are offered by North Carolina auto insurers, an amount the study called “uncharacteristically high.”
Insurance companies tried last year to change all that by backing the doomed “Good Driver Discount Bill,” whose title disguised an old-fashioned Trojan horse. It would have required giving up the caps in exchange for vague promises that insurance firms unshackled from government “price-fixing” would compete even harder for customers by offering new discounts. In South Carolina, rates went up 23 percent after a similar change took hold in the 1990s.
Thankfully, the “Good Driver” bill went nowhere. The system’s working just fine for consumers in North Carolina.
April 29, 2015 at 10:13 am
Richard L Bunce says:
I suspect if you look into the data the average rate for all policies issued could be the lowest in the nation but also the rates for high risk drivers are lower and since they are not covering their full risk the lowest risk drivers rates are higher to make up the difference. When government gets involved in insurance it ceases to be insurance and it becomes a social program to redistribute wealth.
