Commercial Auto Surcharge

The North Carolina Reinsurance Facility (NCRF) has recently announced that effective October 1, 2018 through September 30, 2019 ALL commercial automobile policies written and renewed in North Carolina will be surcharged 14.61% of their automobile liability insurance premiums. This is a surcharge levied by the NC Reinsurance Facility and none of this money is kept by the insurance companies. All insurance companies licensed to do business in NC are required to assess this surcharge. This is a significant increase and we wanted to alert you now for budgeting and planning purposes.

The NCRF is basically the “ceded” automobile facility for NC automobile insurance. In other words, this is where the difficult/poor performing/undesirable risks obtain auto liability insurance. Many people liken this to the “Assigned Risk” pool only for auto liability instead of Workers Compensation.

According to the NCRF website, ( their results for this auto business have deteriorated rapidly over the past few years. Most insurance carriers have also noted that standard commercial and private passenger results have been steadily declining. Reasons cited include 1)distracted driving, 2) higher number of vehicles on the road/congested roads, 3) increased medical costs, and 4) increased repair costs due to more expensive parts, systems, etc. While all these reasons have led to steadily increasing auto rates, an assessment/surcharge of this significance has not been seen by us before. We hope this is a one-time, one year assessment, but have no way of predicting what will happen in late 2019.

In the meantime, we have seen a few “less than accurate” comments spread to our clients so we wanted to get a factual list of bullet points as a basis of reference.

1. This is a mandatory surcharge that ALL NC licensed insurance carriers will collect and pay to the NCRF.
2. This is for commercial autos, and the 14.61% will be applied to the premiums for liability, medical payments, uninsured and underinsured motorist coverage. (not against comprehensive or collision)
3. No agent or carrier has a “special” program or carrier to get around this.
4. This is not considered an increase by the insurance carriers and they will not retain any of this premium. The dollars paid for the surcharge do not apply to your loss ratio.
5. The surcharge will apply for one policy year, starting with your first renewal, on or after October 1, 2018.
6. Carriers are still struggling with exactly how this surcharge will be shown on your renewal policies, etc. However, the charge will be there. No carrier could possibly afford to absorb this and any expectations or comments from individuals that they will, are not credible to the best of any reasonable persons expectations.

Please do not hesitate to call us with any questions or concerns in this matter. We will keep everyone appraised if any new information becomes available.

Click here for the NCRF Announcement