GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

H	1 

HOUSE BILL 313

Short Title:  "Clean Risk”Redefined.	(Public)
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Sponsors: Representative Holt.
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Referred to:  Commerce.
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February 21, 1989

A BILL TO BE ENTITLED
AN ACT TO AMEND THE REINSURANCE FACILITY LAW BY REDEFINING A "CLEAN RISK".
The General Assembly of North Carolina enacts:
Section 1.  G.S. 58-248(l) reads as rewritten:
"(l)	The classifications, rules, rates, rating plans and policy forms used on motor vehicle insurance policies reinsured by the Facility may be made by the Facility or by any licensed or statutory rating organization or bureau on its behalf and shall be filed with the Commissioner.  The Board of Governors shall establish a separate subclassification within the Facility for ‘clean risks' as herein defined. For the purpose of this Article, a ‘clean risk' shall be any owner of a nonfleet private passenger motor vehicle as defined in G.S. 58-131.35A, if the owner, principal operator, and each licensed operator in the owner's household have two years' driving experience as licensed drivers and if none of the persons has been assigned any Safe Driver Incentive Plan points under Article 12B of this Chapter during the three-year period immediately preceding either the (i) date of application for or (ii) the date of preparation of a renewal of a motor vehicle insurance policy. Such filings may incorporate by reference any other material on file with the Commissioner.  Rates shall be neither excessive, inadequate nor unfairly discriminatory.  If the Commissioner finds, after a hearing, that a rate is either excessive, inadequate or unfairly discriminatory, he shall issue an order specifying in what respect it is deficient and stating when, within a reasonable period thereafter, such rate shall be deemed no longer effective.  Said order is subject to judicial review as set out in Article 2 of this Chapter.  Pending judicial review of said order, the filed classification plan and the filed rates may be used, charged and collected in the same manner as set out in G.S. 58-131.42 of this Chapter.  Said order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in the order.  All rates shall be on an actuarially sound basis and shall be calculated, insofar as is possible, to produce neither a profit nor a loss.  However, the rates made by or on behalf of the Facility with respect to ‘clean risks', as defined above, shall not exceed the rates charged ‘clean risks' who are not reinsured in the Facility.  The difference between the actual rate charged and the actuarially sound and self-supporting rates for ‘clean risks' reinsured in the Facility may be recouped in similar manner as assessments pursuant to G.S. 58-248.34(f) or allocated pursuant to G.S. 58-248.41.  Rates shall not include any factor for underwriting profit on Facility business, but shall provide an allowance for contingencies.  There shall be a strong presumption that the rates and premiums for the business of the Facility are neither unreasonable nor excessive."
Sec. 2.  This act is effective upon ratification.