Georgia Deregulates Personal Auto Insurance (Above Minimum Limits, Anyway)

Longtime readers know that I am no fan of insurance rate regulation. In a competitive and free market, market pressures will keep rates from getting too crazy. However, if society perceives a need to provide some protection/stability for certain folks for coverage they are obliged to buy…then I’m OK with rate regulation on the mandatory coverage, but still prefer anything excess of that to be subject to free market realities.

Amazingly, it seems some Georgia legislators agree with that stance, and Commissioner Oxendine’s not happy. From the AJC:

On Monday, a House subcommittee and later a committee agreed to tack an amendment onto a fairly innocuous Senate bill. The amendment would let insurers raise rates on all but the minimum required coverage without having to first get approval from State Insurance Commissioner John Oxendine.

On Thursday, the House passed the amended bill 141-3 with little discussion. The sponsor told his colleagues what the original bill did, but didn’t explain fully the changes and didn’t answer questions. Less than two hours later, the measure won final passage in the Senate 43-10 while insurance lobbyists stood outside, shaking hands.

The bill now heads to Gov. Sonny Perdue for his signature.[...]

Oxendine fears the change will propel Georgia back into the bad old days of the 1980s when the state’s drivers saw skyrocketing auto insurance premiums.

“The insurance industry wants to make the change because they want more profits,” Oxendine said. “I think rates will go up and I think Georgia consumers will pay for it.”

It’s a shame that the measure couldn’t have been passed sooner, before downward frequency trends started reversing themselves. Rates will start to naturally tick upward, which will play into the fear-mongering by the commissioner and consumer advocates.

However, a measure like this should allow insurers to feel comfortable backing off when trends flatten. And, if there’s concern about insurers seeking excess profits on the backs of Georgians…well, if there were excess profits to be made, you can be sure that some player or another will try to undercut any excessively profitable insurer, which should keep such concerns in check.

Bravo to the Georgia legislature for taking such an enlightened stance!