Insurers Weigh-in on Georgia Auto Reform Measure

Taking a major step toward a more competitive auto market, the Georgia General Assembly passed a measure Thursday allowing file and use for private passenger auto rates above the mandated minimum liability limits, according to the American Insurance Association.

Prior approval would still be required for auto rates up to the minimum limits. The legislation (SB 276) now goes to the governor.

“Market oriented rating laws, like the file and use proposal, benefit consumers and insurers alike,” said Ray Farmer, AIA assistant vice president, southeast region. “A file and use rating law encourages greater competition than one that requires prior state approval.”

SB 276 also addresses two recent adverse Georgia Supreme Court decisions that expanded the scope of uninsured motorist coverage.

In Abrohams v. Atlantic Mutual Insurance, the court found that a liability umbrella policy that includes automobile liability must include uninsured motorist coverage equal to the liability limits unless the uninsured motorist coverage is affirmatively rejected in writing.
The bill clarifies the law, explicitly excluding uninsured motorist coverage from umbrella policies.

The second decision, Dees v. Logan, stated that uninsured motorist coverage could not offset payments to the insured from any other source, such as workers’ compensation or similar benefits. Under SB 276 such offsets of benefits are allowed. “Both of these court decisions, if not addressed legislatively, would have been costly to policyholders in the form of higher rates,” said Farmer.

Finally, the bill also includes an expansion of options for policyholders in selecting uninsured motorist coverage. In addition to buying uninsured motorist coverage in its present form or rejecting it, under SB 276 policyholders can also choose to “stack” their uninsured motorist coverage on top of the at-fault driver’s liability coverage. Under current law the at-fault driver’s liability coverage is deducted from the other driver’s uninsured motorist coverage.

Source: American Insurance Association