Some Insurance Rates On Cars To Rise In Georgia

Some Georgians will see their private passenger car insurance rates go up soon, and a change in Georgia laws regulating those increases continues to put the state insurance commissioner at odds with legislators and the insurance industry.

Several companies have informed the commissioner’s office they’ll be raising rates on auto insurance, though five others say their rates are coming down. And Insurance Commissioner John Oxendine says the Legislature has stripped his power to block any increases with a law that took effect Oct. 1

“I can’t even do an investigation afterwards and say ‘you were charging too much.’ … The law specifically prohibits me,” Oxendine said this past week

Others disagree, saying Oxendine’s office can no longer block the increases, but he can still require companies to lower rates after the fact, if they’re deemed to be excessive.

“The standards still say the rates can’t be ‘excessive, inadequate or unfairly discriminatory,’” said Gould Hagler, executive director of the Independent Insurance Agents of Georgia.

The new law changed Georgia from a “prior approval” state, where the insurance commissioner approves rates before they go into effect, to a “file and use” state. That means the rates can take effect after a company inform’s the commissioner of its intent.

The law is meant to broaden competition, but it remains to be seen how it will affect future rates. For now, rate changes are coming that Oxendine questions.

That includes a company Oxendine’s office already approved increases for this year, before the law changed. Now 21st Century Insurance Company wants another increase, for a total of 16.5 percent, Oxendine said.

“And that’s something that we wouldn’t let people do (under the old law),” Oxendine said.

State Sen. Cecil Staton, R-Macon, sponsored a separate insurance bill dealing with uninsured motorist rules, and the change was tacked onto that bill, which quickly passed the Legislature. Staton noted that the cost of required minimum coverages still can’t increase without Oxendine’s approval. Oxendine counters that 90 percent of Georgians have more auto insurance than that.

Though most of the changes are increases, Geico, which operates a large call center in Macon, will lower various rates. It’s small, an average of .9 percent, but will be accompanied by another decrease in January, said Shawn Burklin, the company’s Southeastern regional vice president.

“The legislation just allows us to be able to put in new rates faster,” Burklin said. “Our rates would be the same regardless.”

Of the 19 companies that have filed for rate changes lately, 14 plan average increases and five average decreases. Several of the companies seeking an increase are owned by AIG, which was recently the recipient of billions in federal bailout dollars. Individual changes vary widely based on the company, the type of policy and the type of driver.

For example: One company wants to increase rates for a 28-year-old male with a DUI by more than 80 percent, but the average change across the company’s various policies is actually a small decrease.

The average changes for the 19 companies vary from a 10 percent decrease to an 11 percent increase.

It’s not clear what the long-term effect of the change in the law will be. But these most recent increases are higher, for the most part, than increases approved for the same companies before the law changed, according to figures provided by the commissioner’s office going back to Jan. 1, 2007.

Burklin said the new law will “create better competition in Georgia,” because it allows rate changes to take effect faster.

Oxendine, who is running for governor in 2010, said he doubts that. And he complained that the Legislature approved the change quickly, quietly and without consulting him.

“No one ever included the department,” he said. “No one ever reached out to the public.

Article by Travis Fain, Macon.com

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