In North Carolina the Reinsurance Facility was created to provide motor vehicle insurance to those eligible risk applicants that insurance companies would not voluntarily insure. When an insurance company agent determines that an applicant for insurance is found to be an unacceptable risk, the agent will "cede" the risk to this Facility.
The Reinsurance Facility is available to all carriers licensed to write Auto Liability in NC for cession of policies to be reinsured. This is an underwriting decision on the part of the carrier to cede a policy to the Facility and is solely at the carrier's option.
If you have been ceded (transferred) to the NC Reinsurance Facility by your insurance provider then the Reinsurance Facility is an entity consisting of all insurers engaged in writing motor vehicle insurance in the state of North Carolina. The Facility's purpose is to provide liability insurance for drivers or vehicle owners whom companies do not wish to insure as part of their regular voluntary business. Basically it is a method of transferring the risk of loss from an individual insurance company to all NC insurance companies.
North Carolina law makes no provision regarding which drivers can be ceded to the Reinsurance Facility. The decision to cede a policyholder to this entity is entirely up to each particular insurance company. If an applicant or policyholder for motor vehicle liability insurance is, for any reason, considered an undesirable risk by the company, the insurer may cede the applicant to the Reinsurance Facility even though the person has a clean driving record, such as yourself.
Thus it is possible for a person who has never received a traffic citation or had an accident to be ceded to the Reinsurance Facility. So even though you have clean records without accidents or moving violations your insurance company's guidelines and underwriting rules allow them to transfer you over to the reinsurer. Since NC does not have specific laws determining who can be ceded an insurance company may transfer anyone it considers a bad risk for any reason. We have read that young drivers, the elderly, and some occupational groups often fall within this category for some insurance carriers.
North Carolina does not have an appeals process for being ceded by your insurance provider but drivers may seek coverage with another company whose guidelines would not call for them to be ceded to the Reinsurance Facility.
An Insured such as yourself that is ceded to the Reinsurance Facility and is considered a clean risk, meaning that none of the drivers on the policy have any points, violations or less than two years driving experience, should pay the same as other policy holders with clean driving records who have not been ceded. However, a driver with a bad record, insurance points, moving violations, etc, who is ceded to the Reinsurance Facility will normally have insurance costs that are up to 50 percent higher.
If you want more information on the topic of the reinsurance facility or being ceded to it contact the North Carolina Department of Insurance. This state agency is the insurance regulator for NC. This is a current hot topic in the state of North Carolina.
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