It’s been said that politics is compromise — sometimes you have to give up something in order to get something.
Perhaps a perfect example of this is SB 276, a bill that was passed this past session by the legislature and recently signed into law by Gov. Sonny Perdue.. This new law will bring significant changes to Georgia’s auto insurance industry.
For some time now, consumer groups have been advocating “stacking,” which would allow a consumer to piggy-back their uninsured/underinsured motorist’s protection onto another motorist’s policy. This would provide additional coverage to drivers who are hit by motorists with no insurance or low levels of insurance and was originally the main intent of SB 276. The idea had long been opposed by the insurance industry.
Insurers, on the other hand, have been trying to return to the days when they could raise auto insurance rates without the approval of the insurance commissioner. Because of rising premiums during the 1980s, the laws were changed in the early 1990s to require any proposed rate hikes to be approved by the commissioner before being enacted. Some consumer groups opposed this, citing the potential of returning to higher premiums for consumers.
Supposedly a compromise was reached between the consumer groups and lobbyists for the insurance industry, whereby the consumer groups would back a plan to allow insurance companies to raise rates without going through the insurance commissioner in return for the insurance industry dropping its opposition to stacking uninsured-motorist coverage. Out of this compromise came SB 276 and significant changes to Georgia’s auto insurance industry.
But not everyone is happy, especially Insurance Commissioner John Oxendine, who unsuccessfully lobbied Gov. Perdue to veto the bill and claims to have a large number of rate increase requests pending that will go into effect immediately. Oxendine sees rates jumping significantly, in some cases more than 60 percent, once the law goes into effect. Supporters of the law change see this as scare tactics and say going through the insurance commissioner to change rates was cumbersome and stifled competition. They claim that by removing an unnecessary layer of government bureaucracy and control, this new law allows the free market to operate.
Besides, they say, the Internet has changed the way people buy insurance. Consumers can now go online and shop for the best prices and coverage available. And there is more competition in today’s market than there was in the 1980s, therefore keeping companies from inflating rates.
Findings of various national studies on the deregulation of auto insurance differ with some saying less regulation results in more competition and lower costs while others suggest that consumers benefit when insurers are forced to get advance approval from regulators in order to raise rates.
While the insurance commissioner will still approve rates for the minimum mandatory liability coverage as required by law, rate approvals for non-mandated coverage should not be required supporters say. After all, we don’t regulate health insurance rates or life insurance rates.
However, critics say, with 90 percent of drivers having coverage that exceeds the minimum, consumers will be at the mercy of the insurance companies.
But for all the controversy of the de-regulation portion of SB 276, consumers should be the winners with the stacking provision of the new law, supporters say. After all, with Georgia’s relatively low minimum liability requirements and with an estimated 15 percent of motorists in our state driving without insurance, this portion of the law should benefit most Georgians.
Whatever the case, one thing is certain — if politics is compromise then Georgia’s new auto insurance laws are a perfect example of politics in action.