State lawmakers in North Carolina are considering changes to auto insurance regulations that they think could lower premiums for drivers.

North Carolina's auto insurance system includes what's known as a Reinsurance Facility to cover people with poor driving records. If you've got a bad driving record — or even if insurance companies just think you might be risky — your auto insurance policy might be issued through the program, which is subsidized by fees that all drivers pay on their insurance policies.

This story was reported and written by WUNC

A report commissioned by the legislature found that roughly a quarter of insurance policies end up in the Reinsurance Facility, which it says is far higher than other states.

"North Carolina is clearly the outlier here and the figure suggests that something is wrong: this market has failed," the report said, arguing that there are few restrictions on how many drivers an insurance company can put in the program. The report compared the system to a different approach taken in South Carolina.

Rep. Harry Warren, R-Rowan, who chaired Monday's oversight hearing, said the state might be better off with a different system.

"It seems like the state's mandate for requiring auto insurance, and for insurers to have to write those policies, has resulted in a program that's beneficial to the insurance industry and seems to be unfair to good drivers, and cannot provide quantifiable benefits that justify suppressing a free-market approach," he said.

But Insurance Commissioner Mike Causey told the committee that North Carolina has low auto insurance rates and a low percentage of uninsured drivers. He doesn't see a need for change, particularly until some recent tweaks to the regulation have been in place long enough to know how they're working.

"We have one of the most stable automobile insurance markets in the U.S.," Causey said. "We are consistently among the lowest average automobile insurance rates in the nation, where South Carolina has consistently been in the highest."

Without the program, Causey argued, "there would be a lot of people that would not be able to get automobile insurance."

Causey's department recently approved an 8% increase in auto insurance premiums over two years, which Warren said was part of the reason for Monday's hearing. But Causey noted that the rate hike is substantially less than what insurance companies had initially proposed.

Warren said Monday's two-hour hearing raised more questions than answers, and an additional hearing will likely be needed.

"The question is whether the Reinsurance Facility helps keep those rates low, or if the rates are low in spite of the Reinsurance Facility," he said.