SB505: SB505 "Georgia Prior Approval for Consumer Insurance Rates Act"; enact

26 LC 46 1397 Senate Bill 505 By: Senators Parkes of the 7th, Merritt of the 9th, Jackson of the 41st, Orrock of the 36th, Parent of the 44th and others A BILL TO BE ENTITLED AN ACT To amend Chapter 9 of Title 33 of the Official Code of Georgia Annotated, relating to1 regulation of rates, underwriting rules, and related organizations, so as to require that private2 passenger motor vehicle and residential property insurance premium rates must be approved3 by the Commissioner prior to use; to provide for certain standa rds; to provide for certain4 information to be included in rate filings; to provide for defi nitions; to provide for5 considerations; to provide for classifications; to prohibit certain practices; to provide for risk6 classifications and modifications; to provide for construction; to provide for certain public7 disclosures; to provide for public hearings in certain circumst ances; to provide for related8 matters; to provide for a short title; to provide for an effect ive date and applicability; to9 repeal conflicting laws; and for other purposes.10 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:11 SECTION 1.12 This Act shall be known and may be cited as the "Georgia Prior Approval for Consumer13 Insurance Rates Act."14 S. B. 505 - 1 - 26 LC 46 1397 SECTION 2.15 Chapter 9 of Title 33 of the Official Code of Georgia Annotated , relating to regulation of16 rates, underwriting rules, and related organizations, is amende d by revising Code17 Section 33-9-4, relating to standards applicable to making and use of rates, as follows: 18 "33-9-4.19 Excluding personal private passenger motor vehicle and resident ial property, the T h e20 following standards shall apply to the making and use of rates pertaining to all classes of21 insurance to which this chapter is applicable:22 (1) Rates shall not be excessive or inadequate, as defined in this Code section, nor shall23 they be unfairly discriminatory;24 (2) No rate shall be held to be excessive unless such rate is unreasonably high for the25 insurance provided and a reasonable degree of competition does not exist in the area with26 respect to the classification to which such rate is applicable; provided, however, with27 respect to rate filings involving an increase in rates, no rate for personal private passenger28 motor vehicle insurance shall be held to be excessive unless su ch rate is unreasonably29 high for the insurance provided and a reasonable degree of competition does not exist;30 (3) No rate shall be held inadequate unless it is unreasonably low for the insurance31 provided and continued use of it would endanger solvency of the insurer, or unless the32 use of such rate by the insurer using such rate has, or will, if continued, tend if the rate33 tends to destroy competition or create a monopoly;34 (4) Consideration shall be given to the extent applicable to p ast and prospective loss35 experience within and outside this state, to conflagration and catastrophe hazards, to a36 reasonable margin for underwriting profit and contingencies, to past and prospective37 expenses both country wide and those specially applicable to th is state, to the insurer's38 average yield from investment income, and to all other factors, including judgment39 factors, deemed relevant within and outside this state; and, in the case of fire insurance40 S. B. 505 - 2 - 26 LC 46 1397 rates, consideration may be given to the experience of the fire insurance business during41 the most recent five-year period;42 (5) Consideration may also be given, in the making and use of rates, to dividends,43 savings, or unabsorbed premium deposits allowed or returned by insurers to their44 policyholders, members, or subscribers;45 (6) The systems of expense provisions included in the rates fo r use by any insurer or46 group of insurers may differ from those of other insurers or groups of insurers to reflect47 the operating methods of any such insurer or group with respect to any kind of insurance48 or with respect to any subdivision or combination thereof;49 (7) Risks may be grouped by classifications for the establishment of rates and minimum50 premiums. Classification rates may be modified to produce rates for individual risks in51 accordance with rating plans which establish standards for meas uring variations in52 hazards or expense provisions, or both. Such standards may mea sure any difference53 among risks that have a probable effect upon losses or expenses . Classifications or54 modifications of classifications of risks may be established ba sed upon size, expense,55 management, individual experience, location or dispersion of ha zard, or any other56 reasonable considerations. Such classifications and modifications shall apply to all risks57 under the same or substantially the same circumstances or conditions; provided, however,58 the Commissioner shall establish the maximum amount of any such modification; and59 (8) Nothing contained in this Code section or elsewhere in this chapter shall be construed60 to repeal or modify Chapter 6 of this title, relating to unfair trade practices, and any rate,61 rating classification, rating plan or schedule, or variation thereof established in violation62 of Chapter 6 of this title shall, in addition to the consequences stated in Chapter 6 of this63 title or elsewhere, be deemed violative of this Code section;64 (9) No insurer shall base any standard or rating plan on vehicle insurance, in whole or65 in part, directly or indirectly, upon race, creed, or ethnic extraction; and66 S. B. 505 - 3 - 26 LC 46 1397 (10) No insurer shall base any standard or rating plan on vehicle insurance, in whole or67 in part, directly or indirectly, upon any physical disability o f an insured unless the68 disability directly impairs the ability of the insured to drive a motor vehicle."69 SECTION 3.70 Said chapter is further amended by revising Code Section 33-9-21, relating to maintenance71 and filing rates, rating plans, rating systems, or underwriting rules and examination of claim72 reserve practices by the Commissioner, as follows:73 "33-9-21.74 (a) As used in this Code section, the term:75 (1) 'Personal lines insurance' means private passenger motor v ehicle insurance and76 residential property insurance.77 (2) 'Rate filing' means any filing proposing a new rate, ratin g plan, rating rule, rating78 territory, classification, surcharge, algorithm, or modificatio n thereof that affects the79 premium charged to policyholders.80 (a)(b) Every insurer shall maintain with the Commissioner copies of the rates, rating plans,81 rating systems, underwriting rules, and policy or bond forms used by it. The maintenance82 of rates, rating plans, rating systems, underwriting rules, and policy or bond forms with the83 Commissioner by a licensed rating organization of which an insu rer is a member or84 subscriber will be sufficient compliance with this Code section for any insurer maintaining85 membership or subscriberships in such organization, to the extent that the insurer uses the86 rates, rating plans, rating systems, underwriting rules, and po licy or bond forms of such87 organization; provided, however, that the Commissioner, when he or she deems it88 necessary, without compliance with the rule-making procedures of this title or Chapter 1389 of Title 50, the 'Georgia Administrative Procedure Act':90 (1) May require any domestic, foreign, and alien insurer to file the required rates, rating91 plans, rating systems, underwriting rules, and policy or bond forms used independent of92 S. B. 505 - 4 - 26 LC 46 1397 any filing made on its behalf or a s a member of a licensed rati ng organization, as the93 Commissioner shall deem to be necessary to ensure compliance with the standards of this94 chapter and Code Section 34-9-130 and for the best interests of the citizens of this state;95 and96 (2) Shall require each domestic, foreign, and alien insurer, writing or authorized to write97 workers' compensation insurance in this state, to file such insurer's own individual rate98 filing for rates to be charged for workers' compensation insurance coverage written in this99 state. Such rates shall be developed and established based upon each individual insurer's100 experience in the State of Georgia this state to the extent actuarially credible. The101 experience filed shall include the loss ratios, reserves, reserve development information,102 expenses, including commissions paid and dividends paid, invest ment income, pure103 premium data adjusted for loss development and loss trending, profits, and all other data104 and information used by that insurer in formulating its workers' compensation rates which105 are used in this state and any other information or data requir ed by the Commissioner. 106 In establishing and maintaining loss reserves, no workers' compensation insurer shall be107 allowed to maintain any excess loss reserve for any claim or potential claim for more than108 90 days after the amount of liability for such claim or potenti al claim has been109 established, whether by final judgment, by settlement agreement, or otherwise. Such This110 limitation on the maintenance of loss reserves shall be enforce d through this Code111 section, as well as through Code Section 33-9-23, relating to e xamination of admitted112 insurers, and any other appropriate enforcement procedures . The Commissioner is113 authorized to accept such rate classifications as are reasonabl e and necessary for114 compliance with this chapter. A rate filing required by this paragraph shall be updated115 by the insurer at least once every two years; and.116 (3) As used in this paragraph (2) of this subsection, the term 'excess loss reserve' means117 any reserve amount in excess of the reserve required by law.118 S. B. 505 - 5 - 26 LC 46 1397 (b)(c) Any domestic, foreign, or alien insurer that is authorized to write insurance in this119 state must file with the Commissioner any rate, rating plan, rating system, or underwriting120 rule for all personal private passenger motor vehicle lines insurance:.121 (1) For private passenger motor vehicle insurance providing on ly the mandatory122 minimum limits required by Code Section 33-34-4 and subsection (a) of Code Section123 40-9-37, no such rate, rating plan, rating system, or underwrit ing rule shall become124 effective, nor may any premium be collected by any insurer thereunder, unless the filing125 has been received by the Commissioner in his or her office and such filing has been126 approved by the Commissioner or a period of 45 days has elapsed from the date such127 filing was received by the Commissioner during which time such filing has not been128 disapproved by the Commissioner. The Commissioner shall be authorized to extend such129 45 day period by no more than 55 days at his or her discretion. If a filing is disapproved,130 notice of such disapproval order shall be given within 100 days of receipt of filing by the131 Commissioner, specifying in what respects such filing fails to meet the requirements of132 this chapter. The filer shall be given a hearing upon written request made within 30 days133 after the issuance of the disapproval order, and such hearing shall commence within 30134 days after such request unless postponed by mutual consent. Su ch hearing, once135 commenced, may be postponed or recessed by the Commissioner onl y for weekends,136 holidays, or after normal working hours or at any time by mutual consent of all parties137 to the hearing. The Commissioner may also, at his or her discretion, recess any hearing138 for not more than two recess periods of up to 15 consecutive days each. In connection139 with any hearing or judicial review with respect to the approva l or disapproval of such140 rates, the burden of persuasion shall fall upon the affected insurer or insurers to establish141 that the challenged rates are adequate, not excessive, and not unfairly discriminatory. 142 After such a hearing, the Commissioner must affirm, modify, or reverse his or her143 previous action within the time period provided in subsection (a) of Code Section 33-2-23144 relative to orders of the Commissioner. The requirement of approval or disapproval of145 S. B. 505 - 6 - 26 LC 46 1397 a rate filing by the Commissioner under this subsection shall not prohibit actions by the146 Commissioner regarding compliance of such rate filing with the requirements of Code147 Section 33-9-4 brought after such approval or disapproval.148 (2) For personal private passenger motor vehicle insurance other than that described in149 paragraph (1) of this subsection, such rate, rating plan, rating system, or underwriting rule150 for all such personal private passenger motor vehicle insurance shall be effective 60 days151 after such filing and shall be implemented without approval of the Commissioner, unless152 an earlier effective date is authorized by the Commissioner or a later effective date is153 specified by the insurer. This paragraph shall apply to the en tire personal private154 passenger motor vehicle insurance policy with limits above the mandatory minimum155 required by Code Section 33-34-4 and subsection (a) of Code Section 40-9-37 and shall156 apply to the entire personal private passenger motor vehicle policy with minimum limits157 if such policy has any additional nonmandatory coverage or coverages.158 (3) Notwithstanding the provisions of paragraphs (1) and (2) o f this subsection, an159 insurer may, but shall not be required to, file its rate, ratin g plan, rating system, or160 underwriting rule for all such personal private passenger motor vehicle insurance161 provided for in paragraphs (1) and (2) of this subsection under the filing process of162 paragraph (1) of this subsection.163 (c) When a rate filing of an insurer required under paragraph (1) of subsection (b) of this164 Code section is not accompanied by the information upon which the insurer supports the165 filing and the Commissioner does not have sufficient information to determine whether the166 filing meets the requirements of this chapter, then the Commiss ioner shall request in167 writing, within 20 days of the date he or she receives the fili ng, the specifics of such168 additional information as he or she requires, and the insurer s hall be required to furnish169 such information, and in such event the 45 day period provided for in paragraph (1) of170 subsection (b) of this Code section shall commence as of the da te such information is171 furnished.172 S. B. 505 - 7 - 26 LC 46 1397 (d) Any domestic, foreign, or alien insurer that is authorized to write insurance in this state173 must file with the Commissioner any rate, rating plan, rating system, or underwriting rule174 at least 45 days prior to any indicated effective date for all insurance other than personal175 private passenger motor vehicle insurance. No rate, rating pla n, rating system, or176 underwriting rule required to be filed under this subsection will become effective, nor may177 any premium be collected by any insurer thereunder, unless the filing has been received by178 the Commissioner in his office not less than 45 days prior to its effective date.179 (e) When a rate filing of an insurer required under subsection (d) of this Code section180 results in any overall rate increase of 10 percent or more within any 12 month period, the181 Commissioner shall order an examination of that insurer to determine the accuracy of the182 claim reserves, the applicability of the claim reserve practice s for the loss data used in183 support of such filing, and any other component of the rate filing; provided, however, that184 in the event the overall increase is less than 25 percent within any 12 month period and the185 Commissioner affirmatively determines that he or she has sufficient information to evaluate186 such rate increase and that the cost thereof would not be justified, he or she may waive all187 or part of such examination. In all other rate filings required under subsection (d) of this188 Code section, the Commissioner may order an examination of that insurer as provided in189 this subsection. Such examination shall be conducted in accordance with the provisions190 of Chapter 2 of this title. Upon notification by the Commissio ner of his or her intent to191 conduct such examination, the insurer shall be prohibited from placing the rates so filed in192 effect until such examination has been reviewed and certified b y the Commissioner as193 being complete. Such examination, if conducted by the Commissioner, shall be reviewed194 and certified within 90 days of the date such rate, rating plan , rating system, or195 underwriting rule is filed; provided, however, that if the Comm issioner makes an196 affirmative finding that the examination may not be completed within the 90 day period,197 he or she may extend such time for one additional 60 day period . Any examination198 S. B. 505 - 8 - 26 LC 46 1397 required under this Code section shall be conducted in accordance with Chapter 2 of this199 title.200 (f) Notwithstanding the provisions of subsection (d) of this Code section, in the event the201 filing of any rate, rating plan, rating system, or underwriting rule under subsection (d) of202 this Code section is not necessary, in the judgment of the Commissioner, to accomplish the203 purposes of this chapter as set forth in Code Section 33-9-1, then the Commissioner may204 exempt all domestic, foreign, and alien insurers from being required to file such rate, rating205 plan, rating system, or underwriting rule.206 (g) Filings required pursuant to this Code section shall be accompanied by a fee or fees as207 provided in Code Section 33-8-1.208 (d) No insurer shall charge, use, or implement any rate filing for personnel lines insurance209 unless such filing has been submitted to and approved in writin g by the Commissioner210 prior to charging, use, or implementation.211 (e) Subsections (a) and (d) through (f) of this Code section a pply only to all new rates,212 renewal rates, rating factor changes, territory or classification changes, underwriting rules213 affecting premium, and algorithmic or predictive model updates that affect the pricing of214 personal lines insurance.215 (f) The Commissioner shall approve a rate filing only if the i nsurer demonstrates to the216 satisfaction of the Commissioner that the proposed rates are not:217 (1) Excessive;218 (2) Inadequate; and219 (3) Unfairly discriminatory.220 (g) A rate shall be deemed excessive if the Commissioner deter mines that, according to221 his or her judgment, the rate will create unreasonable profits or is not supported by credible222 data.223 (h) A rate shall be deemed inadequate if the Commissioner determines that, according to224 his or her judgment, the rate is unreasonably low for the provi ded coverage and would225 S. B. 505 - 9 - 26 LC 46 1397 endanger an insurer's solvency, or if the rate tends to destroy competition or create a226 monopoly.227 (i) A rate shall be deemed unfairly discriminatory if the Comm issioner determines that228 according to his or her judgment, similarly situated risks are charged materially different229 premiums without actuarial justification.230 (j) Each rate filing shall include:231 (1) Historical loss experience;232 (2) Trend and projection assumptions;233 (3) Expense provisions;234 (4) Profit and contingency margins;235 (5) Catastrophe and reinsurance assumptions;236 (6) Territory and classification support; and237 (7) Such other documentation for any algorithmic or predictive models used in pricing,238 including model purpose, variables, performance metrics, data sources, and bias testing.239 (k) Consideration shall be given to the extent applicable to p ast and prospective loss240 experience within and outside this state, to conflagration and catastrophe hazards, to a241 reasonable margin for underwriting profit and contingencies, to past and prospective242 expenses both country wide and those specially applicable to th is state, to the insurer's243 average yield from investment income, and to all other factors, including judgment factors,244 deemed relevant within and outside this state.245 (l) Consideration may also be given, in the making and use of rates, to dividends, savings,246 or unabsorbed premium deposits allowed or returned by insurers to their policyholders,247 members, or subscribers.248 (m) The systems of expense provisions included in the rates fo r use by any insurer or249 group of insurers may differ from those of other insurers or groups of insurers to reflect the250 operating methods of any such insurer or group with respect to any kind of insurance or251 with respect to any subdivision or combination thereof.252 S. B. 505 - 10 - 26 LC 46 1397 (n) Risks may be grouped by classifications for the establishment of rates and minimum253 premiums. Classification rates may be modified to produce rate s for individual risks in254 accordance with rating plans which establish standards for measuring variations in hazards255 or expense provisions, or both. Such standards may measure any difference among risks256 that have a probable effect upon losses or expenses. Classific ations or modifications of257 classifications of risks may be established based upon size, ex pense, management,258 individual experience, location or dispersion of hazard, or any other reasonable259 considerations. Such classifications and modifications shall a pply to all risks under the260 same or substantially the same circumstances or conditions; pro vided, however, that the261 Commissioner shall establish the maximum amount of any such modification.262 (o) Nothing in this Code section or elsewhere in this chapter shall be construed to repeal263 or modify Chapter 6 of this title, and any rate, rating classification, rating plan or schedule,264 or variation thereof established in violation of such chapter s hall, in addition to the265 consequences stated in Chapter 6 of this title or elsewhere, be deemed in violation of this266 Code section.267 (p) No insurer shall base any standard or rating plan on vehicle insurance, in whole or in268 part, directly or indirectly, upon race, creed, or ethnic extraction.269 (q) No insurer shall base any standard or rating plan on vehicle insurance, in whole or in270 part, directly or indirectly, upon any physical disability of an insured unless the disability271 directly impairs the ability of the insured to drive a motor vehicle.272 (r) Filings required pursuant to this Code section shall be accompanied by a fee or fees as273 provided in Code Section 33-8-1.274 (s) Following a rate filing, the Commissioner shall:275 (1) Post a redacted version of each rate filing on the departm ent's website. The276 information posted shall be in compliance with Article 4 of Cha pter 18 of Title 50,277 relating to inspection of public records, and shall allow for public comments for no fewer278 than 30 days; and279 S. B. 505 - 11 - 26 LC 46 1397 (2) Hold a public hearing in accordance with Chapter 13 of Tit le 50, the 'Georgia280 Administrative Procedure Act,' if he or she determines a hearing would be in the public281 interest."282 SECTION 4.283 This Act shall become effective July 1, 2026, and shall apply t o all applicable policies,284 contracts, and certificates executed, delivered, issued for delivery, or renewed in this state285 on or after October 1, 2026.286 SECTION 5.287 All laws and parts of laws in conflict with this Act are repealed.288 S. B. 505 - 12 -