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New Georgia bill seeks to freeze auto rates as prices rise

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A proposed bill introduced in Georgia’s legislature aims to prevent insurance companies from hiking rates without state approval.

It’s the latest push by lawmakers seeking to bring rising rates under control as one report indicates average annual rates will likely rise 7% to $1,895 this year. Allstate’s chief executive confirmed his company’s policyholders will likely pay more, telling the Washington Post: “We have not seen moderating cost inflation.”

Last summer, Georgia’s Insurance and Fire Safety Commissioner released a statement claiming Allstate increased its rates by 40% last year through a loophole in the state’s filings policy.

“I am angry and disappointed that Allstate has chosen to exploit a loophole in state law to implement such a substantial increase in costs on hardworking Georgians when families are already struggling with historic inflation everywhere from the gas pump to the grocery store,” Commissioner John F. King said at the time.

“This latest increase means Allstate has now bypassed our office to raise overall rates in Georgia by 40% in this calendar year alone. In response, I have begun conversations with our legislative leaders regarding changes to state law to give our office additional authorities to protect consumers from these types of inexcusable actions.”

Those conversations have culminated into action with the proposed bill seeking to change the way Georgia’s filing system works. As it stands, the insurance commissioner can only approve or deny minimum limits policy filings, while all other filings go into effect immediately under the state’s “file and use” clause.

“Commissioner King has worked closely with House Insurance Chairman Eddie Lumsden to introduce House Bill 221, which closes a loophole in Georgia law that has allowed some car insurance companies to bypass our office and increase rates by as much as 40% in a single calendar year,” a spokesman from the commissioner’s office told Repairer Driven News. “This legislation will give our office additional authority over rate filings in order to protect Georgia consumers from exorbitant price increases.”

Allstate defended its insurance rates as “competitive” and in compliance with the law in a statement to RDN.

“Georgia passed its unambiguous auto insurance law 15 years ago by broad bi-partisan majorities in both the House and Senate, and Allstate has followed it to the letter ever since,” it said. “Our rates are competitive despite all the factors causing them to go up across the insurance industry, which is why customers in Georgia continue to choose Allstate.”

Several factors are contributing to rising insurance costs throughout the U.S., said Insurance Information Institute’s corporate communications director Mark Friedlander.

“These include increasing accident frequency and severity and growing vehicle theft rates, both which have escalated since the pandemic began in early 2020,” Friedlander told RDN. “Additionally, we are seeing higher costs of repairs due to supply chain disruption, leading to more expensive replacement parts and higher costs of labor, as well as more litigated claims. Health care costs have also escalated, leading to higher medical expenses for treatment of accident victims.

“Despite significant rate increases being implemented by most national and regional insurers, rates are not keeping up with accident loss costs paid out by auto insurers,” Friedlander continued. “Several companies are reporting record-level private passenger auto underwriting losses for 2022, leading to the industry’s worst personal lines underwriting performance in a decade.”

Meanwhile, the North Carolina Rate Bureau has submitted a rate filing with the state’s insurance department, requesting a 28% increase in personal auto rates. If approved, the rates would be effective Oct. 1.

The Rate Bureau, which represents North Carolina’s auto insurance companies, is required to submit its auto rate filings each year.

The rising cost of insurance policies is causing more drivers to switch carriers, J.D. Power’s most recent auto insurance trends report found. Insurance shopping spiked 12%, with about 4% of people switching insurers during Q4.

A Canadian province has taken the opposite approach, with Alberta’s government drawing criticism for freezing insurance rates through the end of 2023.


Featured image: An Allstate agency in Acme, Mich. (John Huetter/Repairer Driven News)

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