North Carolinians will be paying more for car insurance starting this fall

North Carolina consumers will pay an average of 4.5% more for auto insurance in each of the next two years under an agreement between the industry and the state Insurance Commissioner’s office.

The premium hikes apply to private passenger car policies issued or renewed after Nov. 30. The number is an average; actual rate increases can vary depending on factors such as geography and the availability of discounts.

The increase of slightly more than 9% over two years is far less than the industry asked for. The N.C. Rate Bureau, which represents auto insurers in the state, filed a request in February for an average rate increase of 28.4% effective this fall.

N.C. Insurance Commissioner Mike Causey says the Rate Bureau’s proposal would have collectively cost consumers $1.6 billion more than the settlement announced this week.

Causey says that while inflation and higher repair costs are factors, the primary reason rates are going up is a growing number of crashes and fatalities.

“This can be attributed to factors such as excessive speeding and driving under the influence,” Causey said in a written statement. “However, the number one cause of accidents and, thus, rate increases, is distracted driving. It is unlikely that we will see rate decreases in the future unless some of these trends change. Drivers and driving habits impact the rates the most.”

The settlement reached with the Rate Bureau also includes motorcycle liability insurance increases of 2.3% in 2023 and 2.3% in 2024.

Jarred Chappell, the Rate Bureau’s chief operating officer, said the industry’s data shows a significant increase in auto insurance claims as the COVID-19 pandemic ended and people hit the road again. And the size of those claims is going up along with the cost of auto parts, labor and used cars.

“The modest changes that will be implemented over the next couple of years are only a portion of the real need indicated by the data,” Chappell said in an interview. “But they are a step in the right direction to maintaining a viable auto insurance market in the state.”

The industry often requests bigger increases than it eventually receives. And often auto insurance rates don’t go up at all in North Carolina. In 2017, when Causey approved an average 2.2% rate increase, it was the first for North Carolina car owners in more than a decade.

The most recent rate increase was a statewide average of 1.6% approved in 2019. Chappell noted that in 2020, when people cut back on driving during the worst of the COVID-19 pandemic, many insurers sent refunds to their auto customers.

By settling, Causey and the Rate Bureau avoided what can be a lengthy process. Causey scheduled a hearing on Oct. 16 on the industry’s request, after which he would have 45 days to approve rate increases. If the industry didn’t like his decision, it could appeal to the state Court of Appeals and ultimately the state Supreme Court if necessary.