High-Risk Drivers Get a Break: Fewer Accidents and Milder Injuries Mean Their Insurance Rates Can Drop 4.6%

By David Ranii, The News & Observer, Raleigh, N.C.

Jul. 6--Automobile liability insurance rates for high-risk drivers are scheduled to drop an average of 4.6 percent beginning this fall.

The cut affects about 7 percent of the cars insured in North Carolina, said Ray Evans, general manager of the N.C. Reinsurance Facility, which administers insurance coverage for high-risk drivers.

Evans estimated that high-risk drivers currently pay an average of about $455 a year for the least expensive liability insurance. A 4.6 percent drop would lower that by about $21. The rate cut, which goes into effect when policies are renewed beginning Oct. 1, does not affect collision rates.

Drivers affected by the decrease are those whose insurance coverage has been shifted to the Reinsurance Facility because they are considered too risky to insure, such as inexperienced drivers or those who have insurance points against their licenses. These high-risk drivers typically pay rates that are 30 percent higher than the maximum rates insurers can charge other drivers.

Although medical costs and the price of repairing cars are rising, the Reinsurance Facility was able to cut rates thanks to fewer accidents, Evans said. In addition, today's cars are safer and, as a result, overall injuries aren't as severe.

The Reinsurance Facility filed its plan to cut rates with the state Department of Insurance last month.

"We're always pleased to see rates going down on a voluntary basis from the industry," said Chrissy Pearson, a department spokeswoman.

The cut doesn't affect the surcharge that all the state's motorists pay to subsidize coverage for drivers deemed too risky to insure. That surcharge currently adds 9.8 percent to auto liability premiums.

Evans said he expects the Reinsurance Facility will be able to cut the surcharge as well, thanks to the same phenomena -- fewer accidents and less-severe injuries. But the magnitude of the reduction hasn't yet been determined.

"We're still looking at the data," he said.

The N.C. Rate Bureau, which represents the state's insurers and is also headed by Evans, submits requests for rate changes that affect most drivers -- those not in the high-risk category -- Feb. 1 of each year. Evans said a request for a rate reduction next February could be in the offing if the data for all motorists are similar to those for the high-risk pool.

This year the Rate Bureau did not seek a rate increase, and rates held steady. Rate requests that affect the majority of drivers must be approved by the state insurance commissioner.

Staff writer David Ranii can be reached at 829-4877 or [email protected].

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