AIA Commends Georgia Gov. for Signing SB 276

The American Insurance Association (AIA) today commended Georgia Gov. Sonny Perdue for signing into law SB 276, which institutes file and use for auto insurance rates for coverage above the minimum limits.

“AIA is pleased that Gov. Perdue understands the importance of free-market competition to Georgia drivers and insurers,” said Ray Farmer, AIA assistant vice president, southeast region. “Competition provides the best products at the lowest possible cost – that’s true of other sectors of the economy and it’s true for insurance. Today 38 states have a form of the ‘file and use’ rating system, and we’re pleased that the governor has just made Georgia number 39.”

SB 276, which was passed overwhelmingly by the Georgia General Assembly during the recently concluded session, will allow insurers to adjust rates for coverage above the mandatory required minimum liability limits without first getting approval from the Department of Insurance. The department also can retroactively disapprove rate changes for coverages above minimum that it deems not appropriate.

SB 276 also provides additional uninsured/underinsured (UM/UIM) coverage options to drivers who are hit by motorists with little insurance coverage, or none at all. Under SB 276, in addition to either selecting or rejecting UM/UIM coverage, policyholders could also select to “stack” their UM/UIM coverage on top of the at-fault driver’s liability insurance. Under previous law the at-fault driver’s liability coverage is deducted from the other driver’s UM/UIM coverage.

Finally, SB 276 also corrects two adverse judicial decisions that expanded auto insurance coverage. The first corrects language in the Abrohams v. Atlantic Mutual Insurance decision by removing UM coverage from an umbrella liability policy. In addressing the second case, Dees v. Logan, SB 276 states that auto insurance coverage does offset payments that the insured has received from other sources.

The rating reform provisions of the law are effective Oct. 1, 2008; the other provisions’ effective date is Jan. 1, 2009.