The House Oversight and Reform Select Committee has called elections officials and an expert to testify before the committee on Tuesday, July 23, at 9 a.m. in the Legislative Building’s Blue Ridge Auditorium.

North Carolina State Board of Elections Executive Director Karen Brinson Bell, Chairman Alan Hirsch, and Andy Jackson, director of the Civitas Center for Public Integrity at the John Locke Foundation, are expected to address the board’s decisions on whether to allow three parties’ petitions to be placed on the November ballot. The board ultimately voted to recognize the Constitution Party and the We The People Party but denied the Justice For All Party. The decisions, mostly along party lines, raised questions about how the board made its determinations, any third-party communication related to the issues, and potential political motivation driving the ruling.

“We question the actions of the Board of Elections,” Rep. Jake Johnson (R-Polk) said. “We need answers as to why three parties that had seemingly met the requirements to be on the ballot, were rejected. If this ruling was politically motivated, as is perceived, we owe it to the citizens of North Carolina to bring that to light.”

“How do we trust the board and its staff when their actions seem to be designed to limit ballot access for new parties?” Rep. Harry Warren (R-Rowan) said. “People need to trust the election system. The process to approve new parties this year has done little to foster that trust.”

The House Oversight and Reform Select Committee has called NCInnovation (NCI) CEO Bennet Waters to testify before the committee Tuesday, July 9, at 9 a.m. in the Legislative Building’s Blue Ridge Auditorium.

NCI is a public-private partnership intended to speed commercialization of university research. After proposals to fund NCI from the earnings of a $1.425 billion endowment, the final 2023 budget bill (HB 259, SL 2023-134) included two appropriations to the endowment of $250 million each.

“The General Assembly made a big bet on NCInnovation. If it succeeds in bringing university research to market, the state will reap significant returns,” said co-chair Rep. Harry Warren (R-Rowan). “NCI leadership has not publicly addressed its funding assumptions or its operations. This hearing can be a step to increase our comfort with putting so much faith in one organization’s ability to pick winning technologies.”

Committee members have questions on NCI’s legislative reporting, receipt and use of state funds, its operations and grantmaking, its funding assumptions, and its long-term plans.

Co-chair Rep. Jake Johnson (R-Polk) noted, “NCInnovation intentionally chose two projects from each region, which does raise concerns of how much it is making decisions on merit and how much on political considerations.”

A hearing that began with conflicting stories between the Department of Motor Vehicles and a vendor ended with questions of DMV’s compliance with state law. Along the way, members had many questions for DMV Commissioner Wayne Goodwin and Idemia North America Vice President for Global Corporate Relations Lisa Shoemaker during the Thursday, June 6 House Oversight and Reform hearing.

From 6:45 on February 15 to 5:45 on February 20, DMV software improperly allowed 2,136 customers to renew their licenses. By the time DMV recognized the problem, its vendor Idemia had already printed many of the requested licenses. Idemia and DMV blamed each other for the eventual decision to find and retrieve the problem cards from among 33,000 printed at the same time. Idemia halted production to conduct the search and did not resume until March 4. Over the next few weeks, the backlog from missed production days and high demand for IDs grew to more than 350,000. Some people were waiting two months to receive their credentials.

Although DMV and Idemia disputed each other’s interpretations of events, both agreed that Idemia will be back on track by June 30. In addition to the 10,000 daily units Idemia produces in Sacramento, California, the company expanded production to its Springfield, Illinois, plant on May 13.

Committee members targeted their questions on the legality of this decision. Chair Harry Warren (R-Rowan) cited Commissioner Goodwin’s May 6 letter to all members of the General Assembly. “As you know,” Goodwin wrote, “the Division of Motor Vehicles (“DMV”) is required to have all credentials produced and issued from a central location. N.C. GEN. STAT. § 20-1(c1)(5) [N.C. GEN. STAT.§207-(f)(5)].”

At the hearing, DMV debated the meaning of “central location” while also acknowledging that the law should be changed to accommodate the transition between two vendors. Chairman Warren asked Commissioner Goodwin whether he had asked for a change in the law, recognizing the challenges it presents. Rep. George Cleveland (R-Onslow) also raised concerns about DMV’s willingness to solve one problem by selectively interpreting the law. Goodwin argued that central location could mean “one company.” Cleveland responded, “When Idemia opened another facility, they broke our state law, and you, I understand, did nothing about this.”

Rep. Allen Chesser (R-Nash) joined Cleveland and Warren in questioning DMV’s interpretation of state law. Chesser asked about DMV’s contracting exemption under HB650 (SL 2021-134) and its willingness to sign a contract for driver’s license production that conflicted with General Statute §20-7(n)(4) which specifies a physical license must include a color photo. Counsel Drew Marsh wrote in his April 12 response to chairs of the Joint Legislative Transportation Oversight Committee, “…DMV had a good faith belief at the time prior to and shortly after entering the contract that the State might be amenable to amending that statute, if in fact it was necessary.”

Chesser held up a poster showing what the updated driver’s license will look like. The license includes a small color photo on the back that required purchase of $3 million in additional equipment and led to a 13% increase in price per card to $2.91 from the originally contracted price of $2.55 per card.

Although DMV’s contract with Idemia and its predecessors dated back to 1996, Goodwin said, “It was our understanding that the legislature had changed the law previously whenever there was a change with contractors.”

“Changing the law at a previous date doesn’t mean you were in compliance with the current law,” Chesser responded.

With the disputes over the meaning of “central location,” the need for a color photograph on driver’s licenses, and DMV’s exemption from Department of Information Technology contracting procedures and oversight, Chairman Warren summed up his frustration: “The department sems to have a pattern of interpreting statute as it best fits your need.”

Idemia has sued DMV over its contract award to Canadian Bank Note Secure Technology, Inc. (CBN-STI). Any judgment in the lawsuit could affect DMV’s ability to use the exemption. The transition to CBN should be complete by July 1, and with the backlog resolved, will settle for now the color photo requirement and the definition of “central location.” DMV has added another series of projects to replace its core systems for driver’s licenses and vehicle titles under the HB650 exemption, so that controversy will continue as will the possible need to amend state law.

While DMV was the focus of the hearing, members complained that other agencies have taken similar liberties with the law. “If you want to circumvent the law, counsel is a good way to go.… I see that being done. Not only in your organization, I see it in other agencies that I have the pleasure of overseeing, and it’s something that really needs to stop,” Cleveland said.

Raleigh, NC – The House Oversight and Reform Committee has requested Department of Motor Vehicles Commissioner Wayne Goodwin to appear before the committee Thursday, June 6, at 9 a.m. in the Legislative Building Auditorium.

Members of the committee will be seeking answers on problems old and new. Goodwin is expected to address the backlog of delivery of driver’s licenses and state IDs and report on the implementation of kiosks. Members will also question the commissioner on the transition to a new vendor for credentials, expectations for the summer DMV office rush, and the status of license plate agencies.

“Drivers have enough frustrations dealing with the DMV without additional delays in getting their licenses. I expect Commissioner Goodwin will be able to explain the reason for the delay and what measures the DMV is taking to fix this latest problem quickly,” co-chair Harry Warren (R-Rowan) said.

Members will also be following up on questions from last year’s House Oversight hearing and a February meeting of the Joint Legislative Transportation Oversight Committee.

“DMV deserves scrutiny,” said co-chair Jake Johnson(R-Polk). “It is one of the most conspicuous services of state government, so it should set the bar for customer service. We know its problems and I hope Commissioner Goodwin will be able to tell us about its progress.”

It is not only widely accepted but widely expected that the Division of Motor Vehicles does not serve its customers well. The Joint Legislative Transportation Oversight Committee will meet Thursday, Feb. 29 to address this and other topics with DMV Commissioner Wayne Goodwin.

When U.S. Army veteran Tyler Tickle moved to North Carolina from Ohio, he went to four DMV offices to get a license in his new state. Even though he arrived “as early as possible,” he was told he wouldn’t be seen that day, with employees recommending an appointment. Tickle experienced the inevitability of the online appointment system—none are available for three months. So, three months later, Tickle was back in the hopes of checking the requirement off his list.

“Zero out of 10,” he said. “I’m extremely unhappy with this whole DMV issue.”

Tickle’s experience is representative of what many customers encounter.

Customers run into multiple roadblocks when on the DMV’s website. They can’t always tell what services are available online. They receive instructions from the website and the email help desk that conflict with what they hear when they go to a driver’s license or license plate office. They often find appointments booked for the next three months because the DMV only provides appointments in the morning, which leads people to go early in the morning to their local office or drive hours away to an office they know has shorter turnarounds.

When people give up and go to the driver’s license office without an appointment, the in-person experience is also rife with frustrations. The DMV touts its “queue anywhere” system that lets people check-in with a QR code or text message and leave the line, but some offices do not display the code at all, others make it available only after noon. Some offices have the QR code inside and make it available only after verifying a customer has the right paperwork, while others have it in the parking lot. This means there is no clear measure of wait times from one office to another. Worse, nobody can check in from their home, something that restaurants and chain hair salons offer.

At least two people who spoke with legislative staff said the instructions they received at the office differed from what they found online or received by email.  One exasperated customer said, “I think if you get anything straightened out at the DMV, it’s a miracle.”

Not surprisingly, parents of new teen drivers are among the most frustrated. From the first learner’s permit to their full provisional license, teens must appear at the DMV three times in 18 months. Because the DMV’s online appointment book only goes out three months, they cannot set their next appointment when they are in the office, something any dentist’s office can do. Some of these visits could even be handled online.

“This office is a madhouse with people coming from all over the state,” one DMV employee said. “My people work hard, we get ’em in and get ’em out.”

Staff at driver’s license offices and license plate agencies are professional and courteous, making the best of a difficult situation and often instituting productivity hacks to improve customer service. The systemic fixes that are needed will require the DMV’s leadership to put the same emphasis on customers whether online or in person.

Thursday’s hearing will address a range of other issues DMV internally, with franchised license plate agencies, car dealers, and vendors that all impact customer service.

Despite the challenges, Rep. Howard Penny (R-Harnett, Johnston) is looking for progress at the committee meeting: “It is our job to make sure the DMV operates as efficiently and effectively as possible.”

Members of the House Oversight and Reform Committee gained a clearer understanding of the North Carolina Reinsurance Facility Tuesday, January 30.

Executive Director Joanna Biliouris explained that the Facility exists because drivers are required to purchase liability insurance, insurers cannot set rates entirely based on the risk of a specific policy, and the rates that are allowed are too low for companies to provide that insurance to everyone. In short, the Facility does what it was created by statute to do. but that the Facility can’t quantify its own value. Legislators also learned that the Facility operates as it does due to how the insurance commissioner sets auto liability rates.

The cost of the Facility in the year ending June 30,2023, was $360 million in surcharges on every auto liability policy written in North Carolina, but the value is harder to quantify. Biliouris said, “The Facility cannot be credited with North Carolina having such low liability rates, but North Carolina’s low liability rates can be attributed to the Facility being a part of the state’s regulatory and statutory landscape.”

Ads tout that customers can purchase insurance priced to their driving habits. However, in North Carolina that is not the case: all drivers pay 9.8% higher premiums through a surcharge to cover riskier drivers in the Reinsurance Facility. Biliouris told the committee that the Facility covers 28% of premiums and 20% of policies. Even policies in the Facility pay the surcharge, which means many of them could be cheaper if an increase in premiums led to a larger reduction in the surcharge.  

Fully 78% of vehicles in the Reinsurance Facility are “clean risks,” meaning the associated drivers have no points on their driving record but have other factors, such as speeding tickets, accidents, or inexperience behind the wheel that make them more likely have a claim.

Legislators focused on ways to improve the broader market and reduce the need for the Reinsurance Facility.  

“I’m hoping we can do some things to accelerate this transition
and get it moving faster.”

Rep. Jake Johnson

Representative George Cleveland (R-Onslow) asked, “Can the Facility do its function as provided by law if clean risks were not allowed?”

“If there was more flexibility in the rates that companies could charge [in the voluntary market], they would likely not send that risk to the Facility.” Biliouris acknowledged. “If the Facility was able to determine the rates for any risk that came in,” it could. Such changes could result in lower premiums and surcharges for most drivers.

“I see a recurring problem, and that is that I believe insurance rates are insufficient,” Rep. Allen Chesser (R-Nash) said. “Is it a bigger problem that inadequate rates have been approved?”

“The drivers that are ceded to the Facility are primarily ceded because it was too much risk for the company to take on for not enough price,” Biliouris said.

Biliouris agreed with co-chair Harry Warren (R-Rowan), “If rates were raised…there would be a reduction in the number of policies ceded.”

Co-chair Rep. Jake Johnson (R-Polk) concluded that he saw a need for reform: “I’m hoping we can do some things to accelerate this transition and get it moving faster.”

Members of the House Oversight and Reform Committee will continue their attempt to get concrete answers from the Department of Insurance on the effectiveness of the North Carolina Reinsurance Facility (NCRF) in a hearing Tuesday, January 30, 2024, at 9 a.m.

In December 2023, the committee questioned Insurance Commissioner Mike Causey about auto insurance rates and the costs versus benefits of the Facility. Causey was unable to provide tangible justification, so, the committee has invited NCRF executive director Joanna Bilouris to address those unanswered questions.

The most prevailing question is: How does the NCRF contribute to the low rates that North Carolina drivers pay?

North Carolina has among the lowest rates in the nation, but it also operates a reinsurance facility, one of only two states to operate its residual market in this way. Twenty-five percent of drivers are in the Facility. Legislators aim to determine what part the Facility plays in those low rates amidst other factors such as liability law and fewer uninsured drivers.

“We expected more from Commissioner Causey in our last hearing but were left unsatisfied,” co-chair Rep. Jake Johnson said. “We anticipate Director Bilouris’s answers to what we’ve asked all along: ‘do our citizens pay more than they should for auto insurance?’ It’s our duty as a committee to investigate the necessity of a government program that may not be financially or practically beneficial to our state.”

“It’s really quite simple: show us evidence that having the Facility does what you say it does—is the Facility the reason North Carolina has low auto insurance rates,” co-chair Harry Warren said. “We can’t just take their word for it. Provide the numbers. We are not the lowest in the country, and those that are, don’t have a facility.”

Early intervention was top of mind for the members of the Joint Legislative Commission on Governmental Operations Subcommittee on Hurricane Response and Recovery on January 23. Legislators sought to ensure the N.C. Flood Resiliency Blueprint provides tangible results to reduce flooding and its impacts in North Carolina.

Department of Environmental Quality (DEQ) Secretary Elizabeth Biser and Project Manager Todd Kennedy were joined by Dave Canaan and John Dorman of AECOM, the contractor selected to develop the Blueprint, to testify before the subcommittee on efforts to date and the path ahead.

Of the $20 million appropriated by the General Assembly in 2021, DEQ has spent $1.9 million to produce what subcommittee Co-Chair Rep. John Bell (R-Wayne) described with disappointment as “a very, very rough draft” of a report and to develop flood mitigation strategies for the Neuse River basin. Biser provided the draft executive summary with her written testimony. The full report still faces months of revisions from staff based on input from more than 150 stakeholders and 500 comments submitted to the project team.

Another $4 million is dedicated to developing an online tool to help state and local governments prioritize flood mitigation strategies. Biser and the AECOM team said a beta version would be ready in April. The remaining $14 million would go toward applying lessons from the Neuse effort to other five other basins, including the French Broad River in western North Carolina.

“We wanted to invest time on the front end in order to make sure things went as smoothly as possible on the back end,” Biser said. This meant learning from other states, bringing in more than 150 stakeholders, and taking an agile, learning-based approach to projects and contracts instead of the traditional “waterfall” approach. For example, lessons from creating strategies and projects for the Neuse River basin will be applied to the other basins.

“We have a tendency to move at the speed of government, not the speed of business.
We need to move at the speed of business.”

Rep. John Bell

Legislators also probed Biser on the future of the Blueprint and whether it would become a permanent part of North Carolina’s government?

“I don’t want you to picture some big bureaucracy, big division-type effort,” Biser said, repeatedly iterating that she sees this as a project, not a program. Looking to future needs, Biser likened it to buying a new car and not changing its oil. “The value of the tool is directly correlated with what data is supporting it.… The data has to be maintained. If we do it one time and walk away, it’s going to be great for a few years, and then you’re going to have wasted your investment.”

Members of the subcommittee were particularly concerned about the hurdles from federal regulations and state procurement rules. Those two areas will likely be subject of further discussions, along with firmer estimates of costs for development, implementation, and maintenance.  

The subcommittee will continue to monitor as each phase of the Blueprint timeline progresses and work to protect the citizens of North Carolina from catastrophic flood events and their aftermath.

“With the Blueprint, we have a tremendous opportunity in front of us,” Bell said. “Not just an opportunity to help protect lives and property and to be able to gauge how we navigate the flooding but an opportunity to show the rest of the country that we can get it right and be a model for them to use for their states. Everybody wants to get this right and have it done in a timely manner.”

Other coverage:

WRAL NC hurricane, flooding response: GOP lawmakers question top Cooper official

WUNC NC to launch $20 million data collection project to tackle future floods

CBS17 NC lawmakers question state officials about storm response

House Oversight and Reform Committee members sought to get solid answers on the value of the North Carolina Reinsurance Facility—the state’s residual auto insurance market system for higher-risk drivers.

The Department of Insurance struggled to answer clearly whether the benefits of the facility outweigh its costs.

Although insurers do not make a profit on their ceded policies, Causey and DOI staff admitted that insurers are able to charge an administrative fee and make profits on other coverage connected to the ceded policy. When Causey said some companies sell all of their policies through the Facility, Committee Co-Chair Harry Warren asked how they could stay in business if they do not earn a profit from these policies.

North Carolinians paid $360 million in the fiscal year that ended in June to subsidize insurance companies selling policies through the Facility. The two surcharges for the current year are set at 13 percent of premiums, which is more than the combined nine percent premium increase over two years the Commissioner approved.

Rep. Allen Chesser questioned the second of those two charges, which is set to keep the Facility from losing money: “The fact that we have to charge a recoupment surcharge for a deficit, does that mean that the rate that we’re charging on those particular policies would be inadequate?”

Chief Actuary Rick Kohan replied, “There is a recoupment that people have to pay because they don’t collect enough money from people ceded.” Which he acknowledged could be simplified to “Yes.”

Additionally, Causey did not know how many members make up the Facility’s governing board. The commissioner, who makes the appointments, is also responsible for accountability.

In his closing statement, Co-Chair Warren said, “I think the discussion today has raised more questions than it answered.”

Another hearing may be necessary for the Reinsurance Facility and Department of Insurance to show if the Facility provides more benefits than costs for North Carolina.

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.”