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Georgia Gov. Sonny Perdue signed a bill that will give automobile insurers the ability to establish rates without the consent of the state’s Insurance Commissioner.
Perdue said he signed Senate Bill 276 because he believes the market should be allowed to regulate automobile insurance rates in order to provide flexibility for Georgia’s drivers and insurers. Policymakers will be watching to make sure that the freedoms provided in this legislation will not be abused, he added.
“I also believe that providing insurers access to a market largely free from rate regulation provides economic development advantages to Georgia,” Perdue said as he signed the legislation into law. “Despite statements to the contrary, approximately half of the states do not regulate the price of automobile insurance, and my study of the issue revealed no discernible difference between rates of automobile insurance in regulated and unregulated states.”
The law states that private auto insurance providing only the mandatory minimum limits required by the state, will still be regulated by the Department of Insurance. In this case, premiums may not be collected by any insurer unless the filing has been received by the Commissioner’s office.
“I am also taking the automobile insurance industry at its word that it will embark on an education campaign to inform Georgians of the ability to opt-out of the stacking provision contained in this legislation,” Perdue said.
For Georgia consumers buying private auto insurance after January 2009 — other than those purchasing the mandatory minimum policy — rates set by insurers will be effective upon filing and can be implemented without approval of the Insurance Commissioner.
The Property Casualty Insurers Association of America, a trade organization, sees the legislation as a potential cost saving measure for consumers that will also offer increased product selection. PCI says amending the current system will reduce political pressures that can be associated with the regulatory system.
“Under the new system, consumer choice and the innovative powers of the free market will play a greater role in determining insurance rates,” said Robert Herlong, vice president and regional manager for PCI. “By providing more flexibility over the setting of rates, the marketplace becomes more responsive to consumers.”