HB 902: Insurance; transparency and accountability in rates and rate regulation after enactment of tort reform law; provide

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 to provide for transparency and accountability in insurance rates and rate regulation after the enactment of tort reform law; to provide for definitions; to provide for examinations and hearings; to provide for the publication of certain information; to extend the time for data collection and analysis related to tort reform law; to provide for findings on savings from tort reform law; to provide for the publication of reports; to provide for related matters; to provide for an effective date; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

Title 33 of the Official Code of Georgia Annotated, relating to insurance, is amended in Chapter 9, relating to regulation of rates, underwriting rules, and related organizations, by revising Code Section 33-9-4, relating to standards applicable to making and use of rates, as follows:

"33-9-4.

(a) As used in this Code section, the term:

(1) 'Excessive' means the rate is likely to produce a long-term profit that is unreasonably high in relation to the insurance coverage provided. Any rate increase of 10 percent or more within any 12 month period and any filing for a rate increase two or more times within any 24 month period shall be presumed to be excessive.

(2) 'Inadequate' means the rate is insufficient to sustain projected losses and expenses to which the rate applies and continued use of the rate endangers the solvency of the insurer or has the effect of substantially lessening competition or creating a monopoly in a market.

(3) 'Unfairly discriminatory' means the rate is not based on sound actuarial principles, does not bear a reasonable relationship to the expected loss and expense experience among risks, or is based wholly or partly on the race, creed, color, ethnicity, or national origin of the applicant, policyholder, or insured.

(b) The following standards shall apply to the making and use of rates pertaining to all classes of insurance to which this chapter is applicable:

(1) Rates shall not be excessive, or inadequate, or as defined in this Code section, nor shall they be unfairly discriminatory;

(2) No rate shall be held to be excessive unless such rate is unreasonably high for the insurance provided and a reasonable degree of competition does not exist in the area with respect to the classification to which such rate is applicable; provided, however, with respect to rate filings involving an increase in rates, no rate for personal private passenger motor vehicle insurance shall be held to be excessive unless such rate is unreasonably high for the insurance provided and a reasonable degree of competition does not exist;

(3) No rate shall be held inadequate unless it is unreasonably low for the insurance provided and continued use of it would endanger solvency of the insurer, or unless the use of such rate by the insurer using such rate has, or will, if continued, tend to destroy competition or create a monopoly;

(4)(2) Consideration shall be given to the extent applicable to past and prospective loss experience within and outside this state, to conflagration and catastrophe hazards, to a reasonable margin for underwriting profit and contingencies, to past and prospective expenses both country wide and those specially applicable to this state, to the insurer's average yield from investment income, and to all other factors, including judgment factors, deemed relevant within and outside this state; and, in the case of fire insurance rates, consideration may be given to the experience of the fire insurance business during the most recent five-year period;

(5)(3) Consideration may also be given, in the making and use of rates, to dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers;

(6)(4) The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the operating methods of any such insurer or group with respect to any kind of insurance or with respect to any subdivision or combination thereof;

(7)(5) Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any difference among risks that have a probable effect upon losses or expenses. Classifications or modifications of classifications of risks may be established based upon size, expense, management, individual experience, location or dispersion of hazard, or any other reasonable considerations. Such classifications and modifications shall apply to all risks under the same or substantially the same circumstances or conditions; provided, however, the Commissioner shall establish the maximum amount of any such modification; (8)(6) Nothing contained in this Code section or elsewhere in this chapter shall be construed to repeal or modify Chapter 6 of this title, relating to unfair trade practices, and any rate, rating classification, rating plan or schedule, or variation thereof established in violation of Chapter 6 of this title shall, in addition to the consequences stated in Chapter 6 of this title or elsewhere, be deemed violative of to violate this Code section; (9)(7) No insurer shall base any standard or rating plan on vehicle insurance, in whole or in part, directly or indirectly, upon race, creed, or ethnic extraction; and (10)(8) No insurer shall base any standard or rating plan on vehicle insurance, in whole or in part, directly or indirectly, upon any physical disability of an insured unless the disability directly impairs the ability of the insured to drive a motor vehicle."

SECTION 2.

Said title is further amended in said chapter by revising subsection (e) of Code Section 33-9-21, relating to maintenance and filing rates, rating plans, rating systems, or underwriting rules and examination of claim reserve practices by the Commissioner, as follows:

"(e)(1) When a rate filing of an insurer required under subsection (d) of this Code section results in any overall rate increase of 10 percent or more within any 12 month period or when an insurer files for a rate increase more than two times within any 24 month period, the Commissioner shall order an a financial and market conduct examination of that insurer to determine the accuracy of the claim reserves, the applicability of the claim reserve practices for the loss data used in support of such filing, and any other component of the rate filing, such insurer's compliance with federal and state laws and regulations, and such insurer's marketing practices, claims handling, complaint handling, and policyholder service; provided, however, that in the event the overall increase is less than 25 percent within any 12 month period and the Commissioner affirmatively determines that he or she has sufficient information to evaluate such rate increase and that the cost thereof would not be justified, he or she may waive all or part of such examination. In all other rate filings required under subsection (d) of this Code section, the Commissioner may order an a financial and market conduct examination of that insurer as provided in this subsection. Such examination shall be conducted in accordance with the provisions of Chapter 2 of this title. Upon notification by the Commissioner of his or her intent to conduct such examination, the insurer shall be prohibited from placing the rates so filed in effect until such examination has been reviewed and certified by the Commissioner as being complete. Such examination, if conducted by the Commissioner, shall be reviewed and certified within 90 45 days of the date such rate, rating plan, rating system, or underwriting rule is filed; provided, however, that, if the Commissioner makes an affirmative finding that the examination may not be completed within the 90 day such period, he or she may extend such time for one additional 60 45 day period.

(2) The Commissioner shall conduct a public hearing within 30 days of the completion of any examination conducted pursuant to this subsection. The Commissioner shall be authorized to take depositions, subpoena witnesses, administer oaths or affirmations, examine any individual under oath, and compel the production of records, books, papers, and other documents, including, but not limited to, a detailed actuarial report demonstrating the necessity of the proposed rate increase based on claims trends, risk factors, and financial solvency; a breakdown of administrative expenses, claim costs, and anticipated profit margins; a statement on how the proposed rate increase shall affect policyholders, including families, small businesses, and commercial enterprises in this state; historical past rate changes and corresponding justifications for the preceding five years; and any other documents deemed necessary. Any examination hearing required under this Code section subsection shall be conducted in accordance with Chapter 2 of this title."

SECTION 3.

Said title is further amended in said chapter by revising Code Section 33-9-41, which is designated as reserved, as follows:

"33-9-41.

(a) On and after July 1, 2026, the Commissioner shall maintain on the department's website in a readily accessible format any rate increases in insurance plans, as demonstrated by the percentage increase from the prior year's premium, based on rates, rating plans, rating systems, and underwriting rules filed pursuant to Code Section 33-9-21. Such data shall be organized by line of insurance and by insurer and shall indicate whether an examination or hearing was conducted.

(b) On and after July 1, 2026, any domestic, foreign, or alien insurer that is authorized to write insurance in this state shall publish on its website in a readily accessible format any rate increases in insurance plans, as demonstrated by the percentage increase from the prior year's premium, based on rates, rating plans, rating systems, and underwriting rules filed pursuant to Code Section 33-9-21. Such insurer may offer any explanations for such rate increases and may indicate when rates stayed the same or decreased.

(c) The data published as provided for in subsections (a) and (b) of this Code section shall be based on data in existence on or after January 1, 2019, and shall be updated annually and whenever a rate is increased. Reserved."

SECTION 4.

Said title is further amended in Chapter 66, relating to data analysis for tort reform, by revising subsection (a) of Code Section 33-66-5, relating to data requests, timing, and limitations, as follows:

"(a) No later than July 1, 2024, and as often as necessary through July 1, 2029 2035, the Commissioner shall request data from insurers, licensed rating organizations, and state agencies for the Commissioner to make findings regarding the impact of tort lawsuits and the assessment of tort related risks. The Commissioner may allow for the confidential submission of such requested data via electronic means."

SECTION 5.

Said title is further amended in said chapter by revising Code Section 33-66-7, relating to subsequent reports, as follows:

"33-66-7.

(a) The Commissioner shall generate a subsequent report in substantially similar form to the initial report provided for in Code Section 33-66-6, and such subsequent report shall include but not be limited to:

(1) Historic and predictive trends based on submitted data;

(2) The effects of any enacted tort reform legislation, including any savings or other benefits passed on to policyholders, the general public, and the state. Such findings may be based on analysis of any data available to the Commissioner, including data submitted to the Commissioner pursuant to Code Section 33-66-5 or the department pursuant to this title, including, but not limited to, reported earned premiums, requests for rate increases, the number of insurers issuing liability policies in this state or applying for or renewing a certificate of authority in this state, and the number of insurers deleting lines of business, withdrawing from the business of insurance, or surrendering a certificate of authority in this state; and

(3) Any further determinations or recommendations for legislative action.

(b) No later than November 1, 2029, the Commissioner shall submit the subsequent report provided for in subsection (a) of this Code section to the Governor's Office office, the House Committee on Insurance, and the Senate Insurance and Labor Committee, and the presiding officers of both houses of the General Assembly and shall notify legislators of the General Assembly of the availability of such report. The Commissioner shall publish such report on the department's website in a prominent location."

SECTION 6.

Said title is further amended in said chapter by revising Code Section 33-66-8, relating to repealer, as follows:

"33-66-8.

This chapter shall stand repealed in its entirety on January 1, 2030 2036."

SECTION 7.

This Act shall become effective upon its approval by the Governor or upon its becoming law without such approval.

SECTION 8.

All laws and parts of laws in conflict with this Act are repealed.