Generations ago, firemen were vital to the operation of locomotives. Firemen were the guys who shoveled coal into the furnace to create steam and power engines.
Then came diesel engines, which were cheaper, more efficient and didn’t need a coal shoveler. But the railroad unions didn’t see it that way. And so for decades trains continued to carry firemen, although they were no longer soiled by coal.
A recent article in The Atlanta Journal-Constitution described how Georgia government has created a modern day fireman — the state insurance commissioner.
The article, published on July 23 and written by colleagues Carrie Teegardin and James Salzer, said Georgia last year saw the highest increases in the nation for personal auto insurance rates — more than twice the average, 12.2 percent vs. 5.6 percent. Not only that, the state was first or second the previous three years.
Since 2011, Ralph Hudgens has picked up a check as insurance commissioner, the elected official charged with regulating insurance in Georgia. But when it comes to protecting consumers from car insurance rate hikes, he’s as useful as a fellow with a coal shovel on a diesel engine.
When asked if he was trying to do something to hold down rates, Hudgens told the AJC reporters, "I can't — the state law, those guys over there, have taken that ability away from me."
Back in 2008, “those guys,” the state Legislature, the business-friendly fraternity that adores unfettered, free market, lightly regulated commerce, voted to take the handcuffs off insurance companies and slap them on the insurance commissioner. After that, car insurance companies in Georgia in almost all cases could increase rates without state approval.
It was a bill that was tacked onto another bill and sneaked through both chambers in record time, because that’s how those things work.
Hudgens, in fact, was also one of “those guys” in the Legislature. But he was not just a mere “guy,” he was chairman of the Senate Insurance and Labor Committee, a post that helped him be one of the top 10 legislators getting love (in the form of gifts) from lobbyists.
At the time, some like then-Insurance Commissioner John Oxendine argued against the action. “In the future,” he said, “if they know they can get whatever they want, the sky is the limit.”
Earlier, I mentioned it was a union that pushed to keep alive that unneeded railroad fireman gig. Now, there obviously is no union representing insurance commissioners in Georgia. But there is something better: The Legislature, a body of 236 ambitious souls who are often looking for a soft place to land after doing their time in the state House or Senate.
The Legislature pays $17,300 for three months of full-time work. (Plus a per diem.) It’s not enough to get rich, but it does open the door to all sorts of cushy bureaucratic jobs, lucrative business contacts or even higher office.
One of those gigs is insurance commissioner, which pays about $120,000 a year and still allows time for a fellow to tend to other business if he must. Hudgens was able to find the time to run a portable toilet company in Athens, a billboard company, and do some land investing while overseeing some other business enterprises.
Remember, this is a business-friendly state and politicians don’t take a vow of poverty.
And the businesses are friendly in return.
My colleagues determined that “two-thirds of the $2.1 million (Hudgens) raised to run for insurance commissioner in 2010 and for re-election last year came from people who work directly or indirectly — such as insurance industry lawyers or lobbyists — in industries that Hudgens’ office regulates or licenses.”
The reporters located regular Georgians, such as Robin Greene, an instructor at a Christian school, who were struggling with the ever-rising insurance bills.
In an interview, they asked Hudgens what he could do to help drivers like Greene.
They said Hudgens was “stumped.”
“You kind of caught me off guard,” he said. “I really don’t know what to say.”
It was as if the insurance commissioner, the man whose job it is to know exactly what to say when asked questions like that, had never really considered the impact of steadily rising rates on folks struggling to get by.
Hudgens, who announced he’s heading into the sunset after next year, declined to talk with me for this story.
Tim Ryles, who ran the office in the early 1990s, told me the commissioner can publicly question the insurance companies when they’re seeking increases, can lobby the Legislature to get tougher laws, or can tell insurance companies he’ll more tightly monitor insurance claims if they’re seeking big increases.
“It’s not a free market,” Ryles said. “Don’t say it’s free market when people have to buy it.”
Insurance companies complain that the last two years have been rough, with car insurance claims overriding premiums. State Farm had it worst last year of all insurers, losing almost $7 billion on car policies but still earning $400 million overall in net income.
In 2015, State Farm made $6.2 billion in net income and $4.2 billion the year before.
Allstate similarly lost money on car claims but still managed to make $1.76 billion last year and $2 billion the year before.
In the AJC interview, reporters asked Hudgens why Georgia should even have an insurance commissioner? How is he helping?
“Gracious, you are asking some questions,” he responded. “If you will go out that door, consumer services division, we have multiple people that do thousands of complaints a year, they end up getting millions of dollars back to consumers from insurers that they were not giving them to begin with.”
Then Hudgens got back to explaining his job. “It’s to regulate the companies …
Then his deputy, Steve Manders, jumped in — sensing his boss was struggling — and added:
“To make sure (insurance) companies are solvent.”
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