Georgia Lawmakers Flip the Script on Use-and-File for Auto Rate Increases

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Georgia lawmakers have approved a bill that, if signed into law, would end the longstanding “use-and-file” mechanism on auto insurance rate filings in the state.

The state Senate last week voted 49-2 in favor of House Bill 221, a measure that Insurance Commissioner John King had asked for. The House had endorsed the bill in February by a vote of 169-2. It now awaits the governor’s signature.

“Heading into this legislative session, we made it a priority to work with the General Assembly to give our office more authority over car insurance rate filings that impact hardworking Georgia families,” King said in a statement. “This legislation will allow us to review all filings before they go into effect – while at the same time guaranteeing speed to market, which is critical for the industry.”

King (Alyssa Pointer/Atlanta Journal-Constitution via AP, File)

Existing law allows rate increase to take effect immediately upon filing with the insurance office. The commissioner then has 60 days to review for actuarial soundness. The office can then approve or reject the filing.

HB 221 flips the process: Rate hikes cannot take effect for at least 60 days, giving the commissioner’s office more time to review.

King called for the bill after Allstate Insurance raised auto insurance rates by 40% in 2022 without hearings or initial review by the insurance office. King called it a “loophole” in Georgia law.

But some in the insurance industry have pointed out that other states have similar provisions and that the Georgia commissioner has had the authority to review the rate hikes later.

“There was no loophole in Georgia. Insurers have followed the regulation appropriately,” said Mark Friedlander, director of corporate communications for the Insurance Information Institute.

He noted that U.S. auto rates have not kept pace with loss costs, which have reached record levels for some carriers. The use-and-file laws are commonplace and have allowed insurers to adjust rates as needed.

“To remain viable, insurers must set premiums at levels appropriate to the risks they cover,” Friedlander said. “Making the regulatory process of implementing rate increases more burdensome will make it more difficult for insurers to write profitable business.”

Allstate could not be reached Monday morning. Last year the company noted that the company had raised rates due to inflation, higher accident severity and frequency, and other factors, but only after lowering rates the year before.

If Gov. Brian Kemp signs the bill, it will take effect July 1.

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