Last year when John King was running for a full term as Georgia’s insurance commissioner, he heard the same thing over and over from voters.
“What are you going to do about auto insurance rates?” King told a House committee, recalling those conversations on the campaign trail. “And when I told them I had no authority to at least negotiate with companies, they couldn’t believe that.”
King hopes House Bill 221, which Gov. Brian Kemp signed into law Wednesday, will give him a little more authority to review auto insurance rate hikes before they take effect.
Auto insurance rates in Georgia have skyrocketed since the General Assembly in 2008 changed state law to let new rates take effect immediately once a company filed them with the insurance commissioner’s office. Previously, companies needed prior approval from the commissioner, and insurers fought to change the law for years, saying then-Commissioner John Oxendine’s decisions were sometimes made based on politics, not actuarially sound decisions.
Oxendine’s replacement, Ralph Hudgens, said when companies asked for double-digit increases, the law tied his hands. Hudgens was chairman of the Senate committee that backed the change in state law in 2008.
Credit: Curtis Compton
Credit: Curtis Compton
So most years, Georgia ranked near or at the top of the nation for auto insurance rate increases. The House Insurance Committee, which historically includes lawmakers who work in the insurance business, was reluctant to make any changes.
Last year, when Allstate Property & Casualty Co. filed an overall statewide automobile rate increase of 25% on Georgia policyholders, King put out a consumer alert and blamed the “file-and-use” law.
Under Georgia’s dual rate-filing system, the commissioner only has the authority to approve or disapprove policies offering state minimum coverage — about 20% of policies — while all other filings go into effect immediately. On those filings, the commissioner then has 60 days to review for actuarial soundness.
At the time, King said, including the latest filing, Allstate had raised rates about 40% in 2022.
Allstate said the company raised rates due to inflation, higher accident severity and frequency, and other factors, but only after lowering rates the year before.
Former state Rep. Carl Rogers of Gainesville, who has spent decades in the insurance business, said: “Everything is going sky high right now. More people, more cars, more accidents, more expensive repairs.
“I think the commissioner has to engage more, and that is what he is doing,” Rogers said.
Under HB 221, rate hikes on most coverage could not take effect for at least 60 days unless approved by the commissioner, giving the office more time to review them.
Any changes to the law are a tough sell in the General Assembly. Committee meetings are filled with insurance industry lobbyists, and several lawmakers work in the business.
During hearings on the bill, Ron Jackson, representing the American Property and Casualty Insurance Association, said it’s a question of competition for insurers.
“The ability to compete and speed-to-market (for rates) are certainly some things our members are going to be concerned about,” said Jackson, whose organization opposed an earlier version of the bill.
It wasn’t just insurers who were skeptical.
State Rep. Carolyn Hugley, D-Columbus, a member of the committee and longtime State Farm agent, expressed concerns that King’s office couldn’t review filings in a timely manner. She said she remembered what the business was like before the most recent file-and-use law went into effect and companies sought big increases.
“When companies were not able to get the rate adjustments and they were delayed and delayed, when they finally came through, I got a lot of angry customers,” she said. “I got a lot of people calling me names that my momma didn’t name me.”
King told lawmakers he wanted to retain a strong auto insurance market in Georgia.
“We’re committed to maintaining and sustaining the market. I don’t want any insurance company to leave this state,” he told members of the House Insurance Committee. “I want to be able to have the authority to negotiate with the companies about how they impact Georgia consumers.”
King said he has granted rate increases in the past. Overall, his office said the average statewide premium increases in Georgia were 3.79% in 2021 and 7.93% last year.
After the bill passed, The Insurance Journal reported that Allstate put out a statement that said, “We support HB 221 as passed by the General Assembly and congratulate Commissioner King on his successful effort to advocate for Georgia consumers while preserving a healthy and competitive auto insurance market.”
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