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By: Allan J. Hayes
A lobbyists job in never done. Like the tides of the ocean, politics has an ebb and flow. Issues go through a cycle effected not by the moon’s gravitational pull but by the nature of America’s form of governance. Government is influenced by public opinion, economic conditions, media scrutiny, bureaucrats, politicians and yes, by lobbyists. All of these influences change and evolve over time.
A good example of this cycle is rates for private passenger auto insurance in Georgia. After rates skyrocketed in the late 1980s, the Georgia legislature changed state law so that the Insurance Commissioner had to approve increases proposed by insurance companies. This system is referred to as “prior authorization.” The auto insurance industry instructed its lobbyists at the Capitol to try and change the law back to a “file and use” system.
In 2008 insurance company lobbyists managed to pass SB 276 which returned Georgia to a file and use rate system. Section 3 of the bill stated that “No rate shall be held to be excessive unless such rate is unreasonably high for the insurance provided and a reasonable degree of competition does not exist in the area with respect to the classification to which such rate is applicable; provided, however, with respect to rate filings involving an increase in rates, no rate for personal private passenger motor vehicle insurance shall be held to be excessive unless such rate is unreasonably high for the insurance provided and a reasonable degree of competition does not exist.” This language allows companies to implement new rates without prior review and the insurance commissioner cannot hold the rates excessive as long as there is competition. The industries argument was that if you let free-market principles take effect, competition will drive auto insurance rates down. At that time, in that political and economic environment, it was a winning argument.
But wait. When the Georgia House Insurance Committee held an early session hearing on January 11, 2017 regarding premiums of private passenger auto insurance it brought unwelcome scrutiny for the property and casualty industry. Dr. Robert P. Hartwig, Special Consultant to the Insurance Information Institute was brought in by industry lobbyists to speak to the committee regarding the rising frequency and severity of auto accident claims. It seems that competition was not able to keep auto insurance rates from rising due to these “environmental factors.”
The Atlanta Journal-Constitution has posted five stories on the issue since July. According to the AJC, Georgia has ranked either first or second nationally for auto insurance rate increases in the last four years. All while having over 200 insurance companies competing in Georgia. Steve Manders, Director of Insurance Product Review for the DOI, addressed the committee in January to highlight some issues the department wants to address with this current file and use system. The department would like to see the auto rate filing system conform to a 45 day waiting period on new rate implementation so the DOI can review the rates for compliance. It also would like to define the term “excessive” to give the department the authority to roll back rates. The hearing room was full of lobbyists representing the individual P&C insurance companies, insurance agents’ groups, the insurance companies’ associations, consumer groups, and the insurance department. Like I said, a lobbyists job is never done.
If you have any questions or would like more information, please contact Allan Hayes at firstname.lastname@example.org.