Under SB 276, Georgia drivers could soon see cost savings and more product selection now that state lawmakers have passed a bill to make the state’s auto insurance marketplace more competitive. SB 276 will encourage more competition among automobile insurance companies. The consumer-driven bill establishes a competitive rating system in Georgia. By amending the current “prior approval” system, the bill reduces the red tape and 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.” The new law would apply to auto policies written at limits above those required by the state.
In the 30 other states that allow auto insurers to adjust rates without prior approval of the insurance commissioner, the results are clear - competition works. Consumers experience lower and more stable insurance rates. A recent multi-state study on automobile insurance deregulation conducted by professors at Georgia State University confirms that less regulation does not translate into higher prices. Competition controls costs; it does not drive them up. Competitive rating laws allow the insurance commissioner to provide necessary oversight without hindering competition. The commissioner still enforces state laws to ensure that rates are not discriminatory, excessive or inadequate, but also works to facilitate fair competition in the marketplace.
“Governor Perdue and the Legislature have delivered a consumer-driven victory to Georgia drivers,” said Herlong. “Their leadership will bring more competition to the auto insurance system and put consumers in the drivers’ seat.”
About PCI
PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $194 billion in annual premium, 40.1 percent of the nation’s property/casualty insurance.