Do North Carolina drivers pay more than they should for car insurance? Would a change in regulations lead to higher or lower rates?

These are among the questions the House Oversight and Reform Committee will seek to answer December 11, 2023, at 1 p.m. in the Legislative Building Auditorium.

The committee will hear testimony from Dr. Jonathan Murphy, assistant professor of economics at Nicholls State University in Thibodaux, Louisiana, and North Carolina Commissioner of Insurance Mike Causey.

The House Oversight and Reform Committee commissioned Murphy, a former Western Carolina University professor, to conduct a study of North Carolina’s auto insurance regulations and residual market.

The state’s residual market—the North Carolina Reinsurance Facility (NCRF)—is a group of insurers required to cover high-risk drivers. Currently a quarter of drivers fall into this category, higher than any other state.

Murphy will testify about North Carolina’s market and the benefits of moving the state to an assigned-risk system where drivers are assessed, and premiums are calculated based on risk. Using similar reforms in South Carolina as an example, he predicts that if North Carolina implemented the move, premiums would fall for drivers at all risk levels over time.

Causey will address his disagreements with Murphy’s report, the specifics of North Carolina’s insurance market, differences in insurance premiums across states, and other regulatory needs of the Department of Insurance.

“Auto insurance is an expense for anyone who drives,” said co-chair Rep. Harry Warren. “If North Carolinians are paying more than they should because of the system we have, it is our responsibility to understand why and to examine alternatives.”

“Price distortions distort behavior,” said co-chair Rep. Jake Johnson. “If a voluntary auto insurance market would create competitive premiums and promote safe driving, we owe it to our citizens to investigate such financial implications.”