State Rep. Jeff Collins may have foreshadowed debate on a proposal to rework the way auto insurance rates are set when he told a panel hearing his proposal, “This is truly in my opinion a non-consensus bill.”

Collins, a Nash County Republican, promoted House Bill 265 during Tuesday’s meeting of the House Insurance Committee. It would allow auto insurance companies to set their own rates. Currently, rates are set by the N.C. Rate Bureau.

Insurance companies could continue going through the rate bureau if they chose. But sponsors of the bill suggested that they wouldn’t.

The committee took no action Tuesday on the bill. Rep. Jerry Dockham, R-Davidson, the committee chairman, said the bill will be brought up again next week, when members of the public will have a chance to voice their opinion on the bill.

Collins said the bill, if enacted into law, would not be “a magic bullet or a poison pill.”

The bill also would eliminate surcharges imposed on drivers to subsidize people considered to be “clean risks” — drivers who may not have bad records, but insurance companies still feel a bit edgy about insuring them.

“Each driver will be paying [his] own share,” Collins said. He said the bill would promote more competition, encouraging more insurance companies to come into North Carolina.

Rose Vaughn Williams with the N.C. Department of Insurance said 166 companies now offer auto insurance in North Carolina.

Committee members peppered Collins and Rep. Tom Murry, R-Wake, a fellow sponsor, with questions during the committee meeting.

The bill would allow total rates to go up, or down, by no more than 7 percent per year, a change from the original bill that allowed an annual variance of 12 percent.

Rep. Rick Glazier, D-Cumberland, asked what would keep a company from continually increasing rates by 7 percent a year, year after year.

Murry suggested that competition and the marketplace would keep such increases from occurring. “If a company does that, they will lose my business,” Murry said. He said such increases would be an abuse of the system.

Rep. Phil Shepard, R-Onslow, who co-sponsored the original bill, said that independent auto insurance agents in his district had qualms with the bill.

“All the independent dealers that I’ve talked to oppose this, and they’ve asked me not to vote for it,” Shepard said. He said there was a need to get information about the bill out.

Collins said that the state insurance commissioner would still be able to challenge rates that he considers excessive.

Insurance Commissioner Wayne Goodwin has voiced opposition to the bill in its original form.

Earlier, Goodwin said that he was concerned that the proposal would not lower insurance rates, and would cause instability in the markets.

Goodwin also said the burden of justifying auto insurance rates would shift under the bill.

“It puts the burden on the people instead of on the company,” Goodwin said. “There are so many concerns, I have no choice to but to oppose it.”

Sen. Wesley Meredith, R-Cumberland, has proposed a similar bill in the Senate.

“I don’t think that the government should be in the business of guaranteeing profits for companies,” Meredith said. “I’m more interested in the competitive model.”

Earlier this month, a Spotlight report from the John Locke Foundation concluded that the surcharge on safe drivers guarantees profits for insurers and limits insurers from offering innovative products that benefit consumers.

Barry Smith (@Barry_Smith) is an associate editor of Carolina Journal.