Tightening up regulations over commercial vehicle insurance

On March 1, 2016, WRAL Investigates reported that North Carolina Insurance Commissioner Wayne Goodwin wants state lawmakers to tighten up regulations over commercial vehicle insurance, stating that some out-of-state trucking companies are claiming in-state residency to obtain lower insurance rates.

It is no secret that North Carolina has some of the lowest vehicle insurance rates in the country. These insurance policies, however, are available only to residents and businesses that reside in the state. According to WRAL, ten years ago, drivers from New York and New Jersey were registering their cars in North Carolina in order to get cheaper car insurance. But, the General Assembly changed the law to stop this from happening.

Today, the same issue is occurring in the $670 million-a-year commercial vehicle insurance market. Reportedly, North Carolina Insurance Commissioner Wayne Goodwin is seeking to have a similar statutory enactment passed. In recent years, the North Carolina Reinsurance Facility raised its commercial rates because of significant claim losses. Goodwin attributes this increase in commercial rates to out-of-state trucking companies claiming in-state residency to obtain lower insurance rates. Goodwin has been quoted as saying: "They have accidents in other states and the like. It impacts insurance rates for the legitimate businesses that are here, and it's becoming a growing problem."

WRAL Investigates confirmed North Carolina freight insurance coverage for Senn Freight Lines in Newberry, S.C. A spokesman for Senn stated that the company has no North Carolina operations, although an internal insurance memo indicated that Senn claims one truck registered and one driver licensed in the state. According to the Secretary of State's Office, another trucking company, Fast Transport, Inc., is listed as a North Carolina registered corporation. However, the address listed for Fast Transport is in a remote residential neighborhood in Wake Forest, and a spokesman for Fast Transport stated that the Wake Forest house is the trucker's accounting headquarters. According to WRAL's investigation, Fast Transport claims dozens of trucks in Florida, Georgia, and Texas but only one truck in North Carolina.

The Insurance Commissioner's position seems to be that only North Carolina companies should be able to take advantage of the state's lower insurance rates. He wants "to protect and help the legitimate companies that are doing business in North Carolina from being taken advantage of by businesses...that are misleading the state and misleading insurance companies as to their presence in the state.

As a result, Goodwin's office is drafting legislation to present to the General Assembly when lawmakers reconvene in April that would better differentiate between North Carolina companies and posers exploiting the law to get cheaper rates.

New Section Created by the Govenor to Combat Employee Misclassification

On December 18, 2015, Governor McCrory issued Executive Order Number 83, which created a new section in the Industrial Commission to combat employee misclassification.  Employee misclassification is when employers classify employees as independent contractors to avoid liabilities and obligations required by state and federal law. 

The Order allows the Industrial Commission to employ inspectors and respond to complaints that employers may be misclassifying employees.  The Section will have liaisons from the Department of Revenue and the Employment Security Division.  In addition, the Commissioner of Labor and the Commissioner of Insurance have the opportunity to appoint liaisons to the section as well. 

While there is a need for an enforcement agency to respond to misclassification complaints, we hope that this joint-effort also creates an opportunity for North Carolina to take a thoughtful, coordinated approach to the new "gig" or "on-demand" economy model.   The gig economy is characterized by freelancers looking for short-term work or "gigs."  They are enabled by Uber, Lyft,  Airbnb, Etsy, and TaskRabbit.  The troubles of classifying these individuals have been reported on in several different  articles over the past year. 

NC Insurance Commissioner Expresses Frustration about Medical Insurance Rate Increases

The Raleigh News and Observer ran an interesting piece regarding the Medical Insurance options in North Carolina. In particular, it comments that the Legislature's decision not to expand Medicaid, set up its own ACA exchange, or partner with the federal government in running an exchange has made premiums higher.  

The Commissioner's reported comments are strong, and not what we typically see from an elected official. It is worth a read, and is located here. 

If you are unfamiliar with the expansion of Medicaid topic, a primer on the subject (albeit comedic) can be located here.

Read more here: http://www.newsobserver.com/opinion/opn-columns-blogs/ned-barnett/article43619169.html#storylink=cpy