HB902: HB902 Insurance; transparency and accountability in rates and rate regulation after enactment of tort reform law; provide

25 LC 52 0851 House Bill 902 By: Representatives Jones of the 25th, Barrett of the 24th, Williams of the 148th, Douglas of the 78th, and Kelley of the 16th A BILL TO BE ENTITLED AN ACT To amend Title 33 of the Official Code of Georgia Annotated, relating to insurance, so as to1 provide for transparency and accountability in insurance rates and rate regulation after the2 enactment of tort reform law; to provide for definitions; to pr ovide for examinations and3 hearings; to provide for the publication of certain information ; to extend the time for data4 collection and analysis related to tort reform law; to provide for findings on savings from tort5 reform law; to provide for the publication of reports; to provi de for related matters; to6 provide for an effective date; to repeal conflicting laws; and for other purposes.7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:8 SECTION 1.9 Title 33 of the Official Code of Georgia Annotated, relating to insurance, is amended in10 Chapter 9, relating to regulation of rates, underwriting rules, and related organizations, by11 revising Code Section 33-9-4, relating to standards applicable to making and use of rates, as12 follows:13 "33-9-4.14 (a) As used in this Code section, the term:15 H. B. 902 - 1 - 25 LC 52 0851 (1) 'Excessive' means the rate is likely to produce a long-term profit that is unreasonably16 high in relation to the insurance coverage provided. Any rate increase of 10 percent or17 more within any 12 month period and any filing for a rate incre ase two or more times18 within any 24 month period shall be presumed to be excessive.19 (2) 'Inadequate' means the rate is insufficient to sustain projected losses and expenses to20 which the rate applies and continued use of the rate endangers the solvency of the insurer21 or has the effect of substantially lessening competition or cre ating a monopoly in a22 market.23 (3) 'Unfairly discriminatory' means the rate is not based on s ound actuarial principles,24 does not bear a reasonable relationship to the expected loss an d expense experience25 among risks, or is based wholly or partly on the race, creed, color, ethnicity, or national26 origin of the applicant, policyholder, or insured.27 (b) The following standards shall apply to the making and use of rates pertaining to all28 classes of insurance to which this chapter is applicable:29 (1) Rates shall not be excessive, or inadequate, or as defined in this Code section, nor30 shall they be unfairly discriminatory;31 (2) No rate shall be held to be excessive unless such rate is unreasonably high for the32 insurance provided and a reasonable degree of competition does not exist in the area with33 respect to the classification to which such rate is applicable; provided, however, with34 respect to rate filings involving an increase in rates, no rate for personal private passenger35 motor vehicle insurance shall be held to be excessive unless su ch rate is unreasonably36 high for the insurance provided and a reasonable degree of competition does not exist;37 (3) No rate shall be held inadequate unless it is unreasonably low for the insurance38 provided and continued use of it would endanger solvency of the insurer, or unless the39 use of such rate by the insurer using such rate has, or will, if continued, tend to destroy40 competition or create a monopoly;41 H. B. 902 - 2 - 25 LC 52 0851 (4)(2) Consideration shall be given to the extent applicable to past and prospective loss42 experience within and outside this state, to conflagration and catastrophe hazards, to a43 reasonable margin for underwriting profit and contingencies, to past and prospective44 expenses both country wide and those specially applicable to th is state, to the insurer's45 average yield from investment income, and to all other factors, including judgment46 factors, deemed relevant within and outside this state; and, in the case of fire insurance47 rates, consideration may be given to the experience of the fire insurance business during48 the most recent five-year period;49 (5)(3) Consideration may also be given, in the making and use of rat es, to dividends,50 savings, or unabsorbed premium deposits allowed or returned by insurers to their51 policyholders, members, or subscribers;52 (6)(4) The systems of expense provisions included in the rates for use by any insurer or53 group of insurers may differ from those of other insurers or groups of insurers to reflect54 the operating methods of any such insurer or group with respect to any kind of insurance55 or with respect to any subdivision or combination thereof;56 (7)(5) Risks may be grouped by classifications for the establishment of rates and57 minimum premiums. Classification rates may be modified to produce rates for individual58 risks in accordance with rating plans which establish standards for measuring variations59 in hazards or expense provisions, or both. Such standards may measure any difference60 among risks that have a probable effect upon losses or expenses . Classifications or61 modifications of classifications of risks may be established ba sed upon size, expense,62 management, individual experience, location or dispersion of ha zard, or any other63 reasonable considerations. Such classifications and modifications shall apply to all risks64 under the same or substantially the same circumstances or conditions; provided, however,65 the Commissioner shall establish the maximum amount of any such modification;66 (8)(6) Nothing contained in this Code section or elsewhere in this c hapter shall be67 construed to repeal or modify Chapter 6 of this title, relating to unfair trade practices, and68 H. B. 902 - 3 - 25 LC 52 0851 any rate, rating classification, rating plan or schedule, or variation thereof established in69 violation of Chapter 6 of this title shall, in addition to the consequences stated in Chapter70 6 of this title or elsewhere, be deemed violative of to violate this Code section;71 (9)(7) No insurer shall base any standard or rating plan on vehicle insurance, in whole72 or in part, directly or indirectly, upon race, creed, or ethnic extraction; and73 (10)(8) No insurer shall base any standard or rating plan on vehicle insurance, in whole74 or in part, directly or indirectly, upon any physical disabilit y of an insured unless the75 disability directly impairs the ability of the insured to drive a motor vehicle."76 SECTION 2.77 Said title is further amended in said chapter by revising subse ction (e) of Code78 Section 33-9-21, relating to maintenance and filing rates, rati ng plans, rating systems, or79 underwriting rules and examination of claim reserve practices b y the Commissioner, as80 follows:81 "(e)(1) When a rate filing of an insurer required under subsection (d) of this Code section82 results in any overall rate increase of 10 percent or more within any 12 month period or83 when an insurer files for a rate increase more than two times within any 24 month period,84 the Commissioner shall order an a financial and market conduct examination of that85 insurer to determine the accuracy of the claim reserves, the ap plicability of the claim86 reserve practices for the loss data used in support of such filing, and any other component87 of the rate filing, such insurer's compliance with federal and state laws and regulations,88 and such insurer's marketing practices, claims handling, compla int handling, and89 policyholder service; provided, however, that in the event the overall increase is less than90 25 percent within any 12 month period and the Commissioner affirmatively determines91 that he or she has sufficient information to evaluate such rate increase and that the cost92 thereof would not be justified, he or she may waive all or part of such examination. In93 all other rate filings required under subsection (d) of this Code section, the Commissioner94 H. B. 902 - 4 - 25 LC 52 0851 may order an a financial and market conduct examination of that insurer as provided in95 this subsection. Such examination shall be conducted in accordance with the provisions96 of Chapter 2 of this title. Upon notification by the Commissioner of his or her intent to97 conduct such examination, the insurer shall be prohibited from placing the rates so filed98 in effect until such examination has been reviewed and certified by the Commissioner as99 being complete. Such examination, if conducted by the Commissioner, shall be reviewed100 and certified within 90 4 5 days of the date such rate, rating plan, rating system, or101 underwriting rule is filed; provided, however, that, if the Commissioner makes an102 affirmative finding that the examination may not be completed w ithin the 90 day such103 period, he or she may extend such time for one additional 60 45 day period.104 (2) The Commissioner shall conduct a public hearing within 30 days of the completion105 of any examination conducted pursuant to this subsection. The Commissioner shall be106 authorized to take depositions, subpoena witnesses, administer oaths or affirmations,107 examine any individual under oath, and compel the production of records, books, papers,108 and other documents, including, but not limited to, a detailed actuarial report109 demonstrating the necessity of the proposed rate increase based on claims trends, risk110 factors, and financial solvency; a breakdown of administrative expenses, claim costs, and111 anticipated profit margins; a statement on how the proposed rat e increase shall affect112 policyholders, including families, small businesses, and commercial enterprises in this113 state; historical past rate changes and corresponding justifications for the preceding five114 years; and any other documents deemed necessary. Any examination hearing required115 under this Code section subsection shall be conducted in accordance with Chapter 2 of116 this title."117 SECTION 3.118 Said title is further amended in said chapter by revising Code Section 33-9-41, which is119 designated as reserved, as follows:120 H. B. 902 - 5 - 25 LC 52 0851 "33-9-41.121 (a) On and after July 1, 2026, the Commissioner shall maintain on the department's122 website in a readily accessible format any rate increases in in surance plans, as123 demonstrated by the percentage increase from the prior year's p remium, based on rates,124 rating plans, rating systems, and underwriting rules filed pursuant to Code Section 33-9-21. 125 Such data shall be organized by line of insurance and by insurer and shall indicate whether126 an examination or hearing was conducted.127 (b) On and after July 1, 2026, any domestic, foreign, or alien insurer that is authorized to128 write insurance in this state shall publish on its website in a readily accessible format any129 rate increases in insurance plans, as demonstrated by the percentage increase from the prior130 year's premium, based on rates, rating plans, rating systems, and underwriting rules filed131 pursuant to Code Section 33-9-21. Such insurer may offer any explanations for such rate132 increases and may indicate when rates stayed the same or decreased.133 (c) The data published as provided for in subsections (a) and (b) of this Code section shall134 be based on data in existence on or after January 1, 2019, and shall be updated annually and135 whenever a rate is increased. Reserved."136 SECTION 4.137 Said title is further amended in Chapter 66, relating to data a nalysis for tort reform, by138 revising subsection (a) of Code Section 33-66-5, relating to da ta requests, timing, and139 limitations, as follows: 140 "(a) No later than July 1, 2024, and as often as necessary through July 1, 2029 2035, the141 Commissioner shall request data from insurers, licensed rating organizations, and state142 agencies for the Commissioner to make findings regarding the impact of tort lawsuits and143 the assessment of tort related risks. The Commissioner may all ow for the confidential144 submission of such requested data via electronic means."145 H. B. 902 - 6 - 25 LC 52 0851 SECTION 5.146 Said title is further amended in said chapter by revising Code Section 33-66-7, relating to147 subsequent reports, as follows:148 "33-66-7.149 (a) The Commissioner shall generate a subsequent report in substantially similar form to150 the initial report provided for in Code Section 33-66-6, and su ch subsequent report shall151 include but not be limited to:152 (1) Historic and predictive trends based on submitted data;153 (2) The effects of any enacted tort reform legislation, includ ing any savings or other154 benefits passed on to policyholders, the general public, and the state. Such findings may155 be based on analysis of any data available to the Commissioner, including data submitted156 to the Commissioner pursuant to Code Section 33-66-5 or the department pursuant to this157 title, including, but not limited to, reported earned premiums, requests for rate increases,158 the number of insurers issuing liability policies in this state or applying for or renewing159 a certificate of authority in this state, and the number of ins urers deleting lines of160 business, withdrawing from the business of insurance, or surren dering a certificate of161 authority in this state; and162 (3) Any further determinations or recommendations for legislative action.163 (b) No later than November 1, 2029, the Commissioner shall submit the subsequent report164 provided for in subsection (a) of this Code section to the Gove rnor's Office office, the165 House Committee on Insurance, and the Senate Insurance and Labor Committee, and the166 presiding officers of both houses of the General Assembly and shall notify legislators of167 the General Assembly of the availability of such report. The Commissioner shall publish168 such report on the department's website in a prominent location."169 H. B. 902 - 7 - 25 LC 52 0851 SECTION 6.170 Said title is further amended in said chapter by revising Code Section 33-66-8, relating to171 repealer, as follows:172 "33-66-8.173 This chapter shall stand repealed in its entirety on January 1, 2030 2036."174 SECTION 7.175 This Act shall become effective upon its approval by the Governor or upon its becoming law176 without such approval.177 SECTION 8.178 All laws and parts of laws in conflict with this Act are repealed.179 H. B. 902 - 8 -