Senate Insurance and Labor Committee, February 17, 2026

Transcript

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1. 0:18:12

   Chairman, please bow your heads. Heavenly Father, thank you for this glorious day. Thank you for bipartisanship. Thank you for working together. Thank you for reminding us that you are in control no matter what we seem to think ourselves in our little tiny minds compared to you. God, we ask you to please, uh, bless everything that we say and do to your name and glory. Amen.

2. 0:18:38

   Thank you, sir. I appreciate that. Thank you. Uh, we're gonna do this, um, SB 364, uh, we're gonna do a hearing only on it. Uh, Senator Hatchett, I've looked at it a little bit, but not in depth, but if you would come up and give us a... Is this a standing committee? Is that what this is, with no chairs? I didn't know what this is. Okay. Um, if you would give me, give us a little bit about this bill and the origins and what it is, I would appreciate it. You are witnesses one and two.

3. 0:19:08

   There we go. And this is, uh, SB 364 LC 46, 1237. So if you'll give us that bill, please, sir.

4. 0:19:23

   Yeah. Thank you, Mr. Chairman and members of the committee. I think it's no secret right now that families across the state of Georgia are struggling financially, and one of the biggest issues in the state that they struggle with is the cost of insurance premiums. I think in Georgia right now, families and businesses are facing nuclear premiums. I hear about it weekly back home.

5. 0:19:54

   This is with auto insurance, homeowners insurance, commercial liability coverage, and these aren't abstract numbers. These are real monthly bills. Uh, these increase in premiums, they're, they feel sudden, they feel unpredictable, and it increases the strain, household budgets and small business margins. Um, when premiums rise, people deserve to know that those increases are justified, and that's what this bill seeks to do.

6. 0:20:30

   This is not a anti-insurance bill. This is a pro-transparency bill, honestly.

7. 0:20:37

   In Georgia, despite what some of the consumers may think, insurance companies do not just simply raise their rates on their own. They must file for rate increases with the insurance commissioner. They must submit supporting actuarial data. They must provide loss experience. They must justify their assumptions. They must substantiate their projections. Those filings are reviewed, and those rates must be approved.

8. 0:21:09

   The rate hikes must be approved. And that approval process only works if the information given is solid,

9. 0:21:22

   meaning it only works if the information given is truthful. If the math isn't right, nothing downstream from that can be right. So if a company is requesting higher premiums, it must provide accurate data to support that request. The insurance commissioner has the authority to request proof. The insurance commissioner has the authority to examine filings. The insurance commissioner has the responsibility to ensure rates are not excessive, inadequate, or unfairly discriminatory.

10. 0:21:56

    This bill strengthens that oversight. The bill provides that if after notice and hearing, an insurer is found to have knowingly submitted false or misleading information that impacts premiums, the commissioner may order refunds to all policyholders that were charged those premiums and impose meaningful penalties up to 10 times the amount improperly collected.

11. 0:22:30

    Essentially, if an insurance company comes in and lies about their profits and receives a rate increase because of that, and the commissioner grants it, and then it's found out that they were not being truthful, then the increase in premiums that Georgians paid goes back to them, and the insurance commissioner can fine them up to 10 times what that was.

12. 0:23:00

    So if an insurance company is following the rules, it has nothing to fear from this bill at all. If you're bringing us accurate data and you're telling the truth, you have nothing to fear. If its filings are honest, if its data is accurate, and its assumptions are defensible, this changes nothing. But if there's runaway pricing unsupported by accurate filings, if there's a lack of transparency, if there's an absence of accountability, then there must be consequences.

13. 0:23:37

    Now, this rests heavily on our shoulders as state legislature because insurance is regulated almost entirely at the state level. So there's no federal regulator reviewing Georgia's rate filings. That responsibility rests here and with our insurance commissioner. In closing, I wanna be very,

14. 0:24:05

    I wanna be very plain when I say this. If we are serious about stability in the marketplace, if we are serious about predictability for families, if we are serious about protecting consumers- From excessive increases, then regul- regulatory oversight must have real enforcement power. All this bill is asking for, all we're asking for, is honest numbers.

15. 0:24:35

    You gotta give us honest numbers before rates go up. That's fair to consumers, it's fair to the market, and I think if we wanna do our jobs and respond to our constituents here, uh, this is a, a good way to send a message to s- essentially make sure that when insurance rates go up, the information is accurate, and if it's not, we're holding those companies accountable.

16. 0:25:07

    Committee questions.

17. 0:25:08

    All right.

18. 0:25:09

    Committee questions here. Senator Kirkpatrick, I believe you're number 11, correct?

19. 0:25:14

    I'm nine.

20. 0:25:14

    You're nine, okay.

21. 0:25:16

    I'm 11.

22. 0:25:17

    Okay.

23. 0:25:17

    Thank you, Mr. Chair. Um, just a couple questions. One, is this either an agency bill or a governor's bill?

24. 0:25:25

    No, this is just one I brought along.

25. 0:25:27

    It's your idea?

26. 0:25:27

    Yeah.

27. 0:25:27

    Okay. And then-

28. 0:25:28

    I have those every once in a while

29. 0:25:29

    ... a follow-up, Mr. Chair.

30. 0:25:30

    Sure. Go ahead.

31. 0:25:30

    Um, I'm a little confused about the, uh, in lines 26 and 27. So I don't, I'm not clear on how that would actually work. So the organization pays the department rather than the po- and then does the department pay the policyholders some of that, or they keep it, or how does that work?

32. 0:25:53

    So when I was talking with leg council, it's set up very similar to how another provision was, which is in paragraph one. So the insurance commissioner would fine the company the amount that was overcharged, but could fine up to 10 times. If it's not clear that this should go flow back to the consumer, we m- may need to make it clear, but the intention of the bill was that the commissioner would fine the company the amount that they charged above and beyond what they should have, deliver the refund back to the consumer, and then could charge them an additional 10 times what it was.

33. 0:26:33

    I don't think that's-

34. 0:26:34

    Go-

35. 0:26:34

    ... actually what it says.

36. 0:26:35

    Go, go ahead.

37. 0:26:37

    Uh-

38. 0:26:38

    Pay, pay the department up to 10 times the amount-

39. 0:26:40

    Maybe it's on 27

40. 0:26:41

    ... yeah

41. 0:26:41

    ... in fines.

42. 0:26:43

    Right, but how that gets back to the policyholder is what I'm trying to figure out.

43. 0:26:49

    Yeah, and is required to refund if, 37.

44. 0:26:53

    So if you look at line 21, and so the fine, line 21 would be paragraph one, which paragraph two references. Um, I believe it, at the time the notice of such hearing is issued shall be refunded to the policyholders, which would be the consumers. That's my understanding. If I need to make that clearer, I can obviously adjust it. That, 'cause that is my intention.

45. 0:27:17

    Mr. Chair, when I call it out, is it LC461237?

46. 0:27:21

    Yes, sir.

47. 0:27:24

    Okay. Senator Kirkpatrick, you're finished?

48. 0:27:28

    I'm finished.

49. 0:27:29

    You're finished, okay. Uh, Senator Steels.

50. 0:27:34

    Thank you, Mr. Chairman. Um, I got s- couple questions for clarification. So kinda going on what Senator Kirkpatrick was saying, um,

51. 0:27:45

    line 23, willfully withheld, knowingly gave false or misleading information. How is that defined? Like, or how do you, how do you, from a legal standpoint, how do you, how do you differentiate between unknowingly withheld or unknowingly gave false or misleading information? I mean, who's, who's the judge and jury to decide the difference between willfully or unknowingly?

52. 0:28:15

    I think the judge to trigger this type of penalty would be the commissioner originally, but then the judge and jury, if it were to be contested, obviously, would probably be an actual judge. I wanted to make sure it was clear that if someone submitted actuarial data that may be inaccurate, or they may forecast something out a year that may just be inaccurate, but it wasn't willful and, and, and they wi- willfully withheld information.

53. 0:28:45

    I'm not trying to catch someone in a technicality. I'm looking for people who truly move money around, say they're losing money to justify a, uh, a rate hike, and then get caught.

54. 0:28:59

    I- is that happening? Has there been demonstrated examples of that from insurers doing this or ratings organizations doing that? It just seems like in, in our world, in our different professions, there are various levels of regulation, but I don't know anybody who has more regulation than these folks already, and I'm just wondering, has this happened? Is this a, a solution in search of a problem, or is this really a thing?

55. 0:29:24

    I have read about it happening. I know in particular some insurance companies were caught doing this in Florida.

56. 0:29:30

    Yes.

57. 0:29:31

    I don't know if they've done that here. I hope they haven't. But if they have, they need to be punished. If they hadn't, then they have nothing to worry about.

58. 0:29:40

    Great. Final question, if I could. You said that you are doing this on your own, which I applaud you for doing. I just wonder, have you consulted with the commissioner's office on this, and what was their feedback?

59. 0:29:54

    I have not.

60. 0:29:55

    Okay. Okay.

61. 0:29:57

    Mr. Chair.

62. 0:29:58

    Thank you.

63. 0:29:59

    Kevin, you are-

64. 0:30:01

    But this is a good tool for them.

65. 0:30:03

    11. Yeah. I can answer that.

66. 0:30:05

    Okay, coming, coming to 11 in just a second. So she was, you were next in line anyhow, so okie dokie. There you are.

67. 0:30:12

    Thank you, Senator, and thank you for bringing this bill. I do believe when we passed tort reform, that was one of our concerns on my side of the aisle when we passed that bill, because we did hear about false information happening in Florida. And just here on April 2025, one point, there was a $1.8 billion cover-up by Florida insurance companies. To answer your question, this was recent just last year, and they funneled those profits to affiliates. So it does happen, and I just wanted to point out that was our concern, and I appreciate you bringing this bill forward because what you're trying to fix, that loophole, is accurate.

68. 0:30:48

    I just wanna make sure, too, as was put out, that this money is going back to policy holders at some point. I, I understand it's going back to the insurance commissioner for the fine. I just wanted to make sure that that money does, um, get back to policy holders if, if some infraction is filed.

69. 0:31:05

    Yeah, and I think if I need to rework the bill, which I will after testimony, 'cause I... First, thanks for letting me have this and, uh, now that it is just a hearing only, I'll try to come back if, if I get back on agenda with a substitute so I can address those concerns and make sure that it's clear that it goes back to the policy holder. Of course, 'cause that's ultimately who... That's who's struggling and that's who, if insurance companies are taking advantage of anyone, is the general public, 'cause we require insurance on those things.

70. 0:31:36

    Thank you very much. Senator. Thank you, Mr. Chairman. Uh, can you give me a little background on the genesis of the bill? Is it, uh, some incident that occurred in Georgia specifically, or some cases, uh, that brought it forth, or you just thought it was a good idea as a preemptive strike to do this kind of legislation to make sure that if it happens, we have a, a tool to deal with in order to correct it?

71. 0:32:02

    Yeah, I guess the impetus behind this would've been last year. I mean, I dropped it last year after crossover, uh, to kinda get the conversation started because of there was a pretty big bill last year that we were all focused on that dealt with the civil justice system. Uh, and insurance was talked about a lot. And just in my research and really hearing from constituents-

72. 0:32:22

    Yeah

73. 0:32:23

    ... about it, um, this was something that I came up with really just as another tool for the insurance commissioner to have to hold insurance companies accountable that are taking advantage of Georgians and causing these nuclear premiums to continue.

74. 0:32:41

    So what I'm saying, there's no case history of as an, an insurance company X did this to, or series of insurance company did this to a group of, uh, clients and constituents?

75. 0:32:54

    No, just, just the response from constituents about how high the premiums are, and then what we heard about in Florida and other states dealing with insurance companies that are hiding the-

76. 0:33:05

    So it's really to the nature.

77. 0:33:06

    Yeah.

78. 0:33:06

    Thank you.

79. 0:33:06

    Yeah.

80. 0:33:06

    All right. Okay.

81. 0:33:11

    To my vice chair in the pro tem, give, give, give, give, uh, give your, the-

82. 0:33:18

    Thank you, Chairman. Uh, Senator, the tools that the, the... I mean, it's really, they're spelled out, some of them in this bill already in this code section, but the commissioner can already, you know, require them to refund premiums to the, uh, policyholders. He can, uh, ultimately, the nuclear verdict, you, you used nuclear, uh, premiums, but the nuclear verdict for the commissioner is he can suspend their ability to even do business in the state of Georgia, but he's got all kind of le- levers and, uh, measures in between that.

83. 0:34:01

    So he's issued some, our current insurance commissioner has issued some pretty hefty fines, mostly in the health insur- health provider market with regard to the, uh, mental health parity and those kind of things, some really big fines. So he can fine companies, he can, uh, require them to return premium, he can suspend their certificate of authority. Um, this, uh, obviously just gives him, you know, the ability to require them to return 10 times the amount of, of fines that they would be required to pay.

84. 0:34:38

    So if he determined, he or she determined that they had overcharged premium, he's gonna require them to pay back potentially 10 times that premium. I mean, y- you're talking about potentially making a small, you know, if it was a Georgia domiciled small regional type carrier, it could put them in insolvency. Um, I don't know that that benefits the, the policyholders if their insurance company is insolvent. So I just, I think it's...

85. 0:35:09

    I'd like to hear, I don't know if the commissioner's office is gonna testify, but I'd like to hear, you know, where the need is, and if this is something they're looking for. We've, we've got a, a current insurance commissioner, um, and I guess this is supposed to be a question. So is it not true that we have a current insurance commissioner that is a man of great integrity and, uh, impeccable character? But that's not always been the history in our state, sadly.

86. 0:35:43

    And, you know, this, giving one man judge and jury authority to basically put a company out of business, uh, kind of scares me. Is that not true? Does that give you any concern?

87. 0:35:59

    Well, I guess to, to hopefully stifle some of your concern is I, I wanted to make sure. It, it does say willfully withheld information from, or knowingly gave false information to the commissioner in an attempt to affect rates. So I tried to set a pretty high bar. And ultimately, if you do this, you're lying to the commissioner to steal from the pockets of Georgians, and in that case, I wish you would just kick them out of the state, but 10 times may not be enough, in my opinion.

88. 0:36:32

    And this isn't a cause of action. This is a commissioner who we elect statewide that is the gatekeeper for Georgians who are struggling with this, and I hope this isn't happening. You know, high insurance premiums right now may be the cause of something else. But if it- If they are artificially inflated due to false information that's being given to the commissioner, I wanna give him the biggest hammer we can give him.

89. 0:37:00

    So if, if my understanding it right, under current law, if he determines that they've provided bad information, he can require them to return the excess premium to the policy holder is the way I read it.

90. 0:37:16

    And sus-

91. 0:37:17

    Or, or he could suspend them from doing business, do a cease and desist, tell them, "You can't do business in Georgia." Um, that seems like he's got a, a lot of authority currently to-

92. 0:37:32

    Mm-hmm

93. 0:37:32

    ... take care of the situation, and I haven't heard him come to us asking for more authority in, in this type of scenario. And it doesn't sound like you have necessarily either.

94. 0:37:45

    I have not spoken with him about this bill yet.

95. 0:37:47

    Okay.

96. 0:37:47

    No, sir.

97. 0:37:48

    Thank you.

98. 0:37:50

    Uh, Senator Roberson.

99. 0:37:53

    Thank you, Mr. Chairman. Chairman Hatchett, Floor Leader Hatchett, um, you've, um, you're, you're an attorney, correct?

100. 0:38:05

     Mm-hmm.

101. 0:38:07

     You ever practiced any criminal law or anybody in your family ever practice criminal law?

102. 0:38:12

     They have.

103. 0:38:12

     Do you understand the definition of the word intent?

104. 0:38:15

     Yes.

105. 0:38:16

     If somebody accidentally does something, then in many cases they're not charged with anything, right?

106. 0:38:21

     No.

107. 0:38:22

     It's just an accident. That's the reason we call most crashes accidents.

108. 0:38:25

     That's right.

109. 0:38:25

     If they're intentional, then we charge them under criminal law, correct?

110. 0:38:28

     That's correct.

111. 0:38:28

     If they intentionally run somebody over, if they intentionally crash into somebody. When you talk about willfully withheld and knowingly gave false information, you're talking about people that intentionally violated a rule, regulation, or law, correct?

112. 0:38:42

     Correct.

113. 0:38:43

     So the standard you set is higher than, than the current standards we have now.

114. 0:38:48

     That's correct.

115. 0:38:49

     And under the current standards we have now, the commissioner, who happens to be a really good friend of mine and who I'm carrying department legislation for, can penalize bad actors, true?

116. 0:39:00

     That's true.

117. 0:39:01

     Do you think we would give him firmer ground if we say he shall, uh, carry out certain actions where as a law enforcement officer for many years I had discretion in certain areas. But when it came to Georgia law, I had no discretion because the Georgia law said shall. So even though I may have found somebody that made a very poor choice, and I may have felt sorry for them, the law required that I execute that particular law, which took a lot of pressure off me as a law enforcement officer and made sure that we had continuity throughout the state in how our laws were enforced.

118. 0:39:39

     Would you agree with that?

119. 0:39:41

     Uh, I, I, I agree with your position on, you know, the law enforcement officer. I, I would defer to the committee on the shall issue here. Um, I do think that a shall can be used sometimes when you have, like in law enforcement, it's being enforced by multiple people across the state. And in this situation it would just be one individual. I would expect it to be consistent to where he wouldn't pick winners and losers. Um-

120. 0:40:10

     But to the, to the present pro tem's point, um, the current insurance commissioner, and, and I would say this if, if all of them were in the room, is far and away, uh, one of the, one of the most, um, strongest men of integrity and honor that we've ever had in that position. If you look at his history in the military service and law enforcement and the way he's conducted himself since being in that office compared to others, which I could be wrong, but I think two ended up casting shadows inside of prisons here in the state of Georgia.

121. 0:40:46

     Um, and so I think when we put men and women in those positions, that we have to give them the tools to do the job, and sometimes those tools may be a shall.

122. 0:40:57

     Yeah.

123. 0:40:58

     And to another thing, I, I think if an insurance company, no matter what their backstop is, if they intentionally go out and take advantage of a policy holder, and the punishment is five times, 10 times, 15 times. If they choose to go out and violate our laws and our rules, then saying, "If I have to pay this fine, then it'll make me insolvent," well, that's the choice they made on the front end by going out there and intentionally misleading.

124. 0:41:31

     And is it not true, you and I spoke earlier today, and you and I were talking about a person that is my constituent, who is a retired Marine and who lives in my district and had some damage to his home. And the insurance company drug him and his family through absolute misery, even though he had been a 30 plus year policy holder, when I felt he was not being treated fairly. And sadly, a single phone call from a state senator seemed to solve the problem.

125. 0:42:03

     And that is not what we're here for. Would that be correct?

126. 0:42:06

     That is correct.

127. 0:42:07

     Yeah. So, um, and, and just to be perfectly clear, tort reform passed last year.

128. 0:42:13

     That's right.

129. 0:42:14

     And where I sat in the Senate, I sat in the middle of three trial attorneys. And I believe that myself and all three of those trial attorneys, yourself included, voted for the legislation that was tort reform. Is that not correct?

130. 0:42:28

     That's correct.

131. 0:42:29

     Okay. And so all we're trying to do is make sure that everybody in this game is playing by the f- the right rules. Would that be correct?

132. 0:42:37

     That's correct. Yeah.

133. 0:42:38

     Thank you, Mr. Floor Leader. I appreciate you.

134. 0:42:40

     Thank you.

135. 0:42:43

     Senator Lucas.

136. 0:42:47

     I, uh, I don't wanna throw water on the fire, but right now the insurance commissioner can- Make 'em do a refund, fine them, or cus- or suspend their license to do business in the state of Georgia. That's by law right now.

137. 0:43:11

     Is that a question? Is that... That is a statement versus a question- ... that you are asking.

138. 0:43:19

     That- that's a statement of what-

139. 0:43:21

     Right

140. 0:43:21

     ... the insurance commissioner-

141. 0:43:23

     Right

142. 0:43:23

     ... can do because when he rules, they have other folks over there who do the rate filings and everything else. And if they find out that you've lied on a, on, on, on a rate filing, they can suspend you right then. They can make you pay a fine and make you pay restitution to the folks who you did it to. By law right now, he can do that.

143. 0:43:51

     Great. Great. Okay. Thank you, sir. Thank you. I w- I would just, uh, we don't have anybody else. I was just gonna ask this question. Do you know the, what the commissioner's current powers are as far as what he can charge? Uh, this has a 10 times. I know that some of the fines that he has, uh, done have been dollar amounts that are fairly large. D- do you know what his current authority is as far as how big or how heavy he can already, uh, do, uh, fines?

144. 0:44:17

     Yeah, if my memory serves me correctly, they are finite numbers, I believe. Um, but it's not a multiplier necessarily be- But it is, um, something I can, I can get. I just don't have those numbers. I had 'em memorized last year when I dropped this bill. I do not have them now, but I'm happy to get them for you.

145. 0:44:40

     I'm just, if I read the bill correctly, let's assume that the fine was a million dollars. As I'm reading this, that would multiply by 10 to $10 million.

146. 0:44:56

     The, the, the portion here, because as I'm, as I'm reading it, it would, uh, take the 10, pay the department up to 10 times the amount in fines that such organization is required to, and then to refund to the policyholders. My question, I guess, is this, is that, is the 10 times the fine he makes at his discretion, which he has the power to do, is it 10 times that amount that we're talking about here? That was one of the questions I had, because I don't know what his authority cap...

147. 0:45:30

     Uh, does he have a cap? Is my question, first of all, and then is your 10 times whatever his cap is, uh, is, is the question I have.

148. 0:45:39

     Yeah, I, I think maybe we can work on the wording here a little bit. But what my intention was with this is if you, let's say you appeal to the insurance commission to allow you to raise rates, and you're able to raise those rates by $200 per month per policyholder in the state. And I, I would say that you have to return the $200, but you can be fined up to 10 times the amount extra that you charged the policyholder.

149. 0:46:11

     Okay.

150. 0:46:12

     Um, I think to the pro tem's credit, a smaller insurance company may not be able to absorb that. A larger one probably could if we're only talking about, you know, whatever you... I guess it's, it's, it's how, it's how much money you steal from a Georgian, I guess. If you lie and say you need this rate hike, and you increase it by 5,000%, and then that's multiplied, yes. But if you're, uh, if you're talking about 100 bucks, and you have to increase to 1,000 depending upon the number of policies that you sell, I just, I think it's justifiable to say if you steal from our constituents, you have to pay this back, and then times 10.

151. 0:46:57

     Do you, uh, and, and I ask this, you know the difference between a mutual and a stock company?

152. 0:47:01

     I know you know a lot better than I do, yes.

153. 0:47:05

     A- and, and when I say that to you, not to be s- smart, but is that a mutual technically is owned by the policyholders, where a stock company is owned by the stockholders themselves. And one of the c- conversations that I've had in various, uh, the severity of penalties is that basically, are you really punishing those people that are responsible, or do you, uh, punish the, the policyholders themselves? So that balance as far as that, um, my, my question that really comes to this is I think the commissioner does have power right now.

154. 0:47:37

     I don't know how high that can go.

155. 0:47:39

     Correct.

156. 0:47:39

     And then I think this, is that if he finds that there is misrepresentation in the information that is presented, he should have the authority to punish them. Um, and if I take what is, whatever he does times 10, I'm trying to, in my mind, understand. I'm like this. If somebody does wrong, they need to be punished. But how does this tie with his power that he already has? That's where I'm missing right now.

157. 0:48:07

     And I can get that information for you. And, and obviously an insurance company, their whole job is to calculate risk, right? And for some companies, a million dollar fine isn't, the reward is bigger than the risk to provide false information. And for those same large companies, this would, I think, with a, a 10X multiplier on the amount in excess you charge a policyholder, I think that would be enough to deter, uh, wrongdoing.

158. 0:48:41

     Okay, we have stirred up some more questions. If I can for Senator Cowsert. Uh, there you go.

159. 0:48:49

     Thank you, Mr. Chairman. Why, why not just make it a criminal, why not just make it a criminal violation? I mean, this, your, your fine here is so- ... huge potentially. I mean, I can imagine if it was State Farm, and they've got 2 million policy holders, and it, you know, you, they missed it by $100 each. Then you're looking at a $20 million fine in the discretion of the commissioner. I mean, what you're claiming is they essentially have sworn under oath or committed a fraud.

160. 0:49:21

     W- that would ordinarily, with a penalty as massive as you're giving here, they might have a right to a jury trial to prove they intentionally did that. Why not just create a, a new criminal code section that it'd be a crime to lie to the insurance commissioner, and then let's let prosecutors handle it, and let them have a right to a jury trial, and be proven beyond a reasonable doubt before you, uh, bankrupt companies, you know?

161. 0:49:47

     You think it should be a crime just for the individual that lies?

162. 0:49:52

     Yeah. I mean, you're gonna hold it against shareholders of a company that don't even have knowledge of that lie?

163. 0:49:58

     I think the shareholder companies could, in turn, file some type of claim against the spokesperson for them as a fiduciary duty to the company. Um, but I don't do those. I don't do a lot of work there. But I think, yes, criminal laws work. But I think when you're trying to... What I'm trying to do is, is truly deter companies from lying about profits in order to get the commissioner to allow them to raise their rates.

164. 0:50:32

     In my opinion, you can hit a, for deterrence, you can hit a company like an insurance company that calculates risk harder with something like this than, well, one person might get criminally charged, but we got good attorneys that could defend them.

165. 0:50:47

     Well, it can be a corporate defendant.

166. 0:50:50

     Yeah. I think you and I are gonna disagree on why not criminal versus civil. And I hope, like I said earlier, insurance companies don't lie to Commissioner King or whoever the commissioner is, and I hope this would deter them from doing it. That's the whole point of this. Good companies won't have anything to worry about.

167. 0:51:08

     But they're subject to these fines without due process of law that you would have in a criminal proceeding.

168. 0:51:15

     So the beyond a reasonable doubt-

169. 0:51:15

     But the commissioner's the czar can... I'm sorry.

170. 0:51:18

     Sorry. Like a beyond a reasonable doubt standard?

171. 0:51:21

     Yeah, or even, you know, a right to, uh, call witnesses and cross-examine witnesses, whatever. If they're subject to the whim of the commissioner saying, "You know what? I don't think y'all were honest with me. Think you withheld this, so I'm about to fine y'all $20 million." No due process rights, no witnesses on your own behalf, no w- right to cross-examine where I got my ev- I mean, that's just, it's a Pandora's box here when you give a commissioner the power to act, you know, like some Russian czar.

172. 0:51:50

     Well, and I'm happy to work with you on this. Because if you're good with it, if we can have some type of due process involved, whether it be, I don't know what the structure would look like, but I'm not trying to throw any company that's doing the right thing or, or an accountant that makes a mistake under the bus. I think juries are the best way to solve these types of issues, and I don't think putting a cap on it or, or, or, uh, allowing one person to decide in this situation would necessarily...

173. 0:52:21

     I, I'm not against that. I, I'm happy to work with you on some type of due process procedure so that we capture the wrongdoers, 'cause that's who I'm trying to capture, someone who's truly lying to a commissioner, who's the gatekeeper, to then get an increased rate that affects all Georgian... And if you're a big company like that, that's... I mean, they're stealing that out of our constituents' pockets.

174. 0:52:45

     Can I ask one follow-up? I mean, are there instances of this that we're aware of? Is there something particular where you know they've lied that, and got away with it?

175. 0:52:54

     Not in Georgia, but in Florida there have been reports of it. I haven't investigated personally, but based on a lot of articles that I've read, it happened in Florida, and I think Senator Merritt mentioned that earlier.

176. 0:53:05

     Okay.

177. 0:53:06

     Hopefully it hasn't happened here.

178. 0:53:09

     Okay.

179. 0:53:13

     And I know that keeps coming up. Um, thank you, Mr. Chairman. Are there instances? What we're trying to do is prevent any of those instances, if I'm understanding you correctly. No, we don't know, but Florida didn't know until, until an investigation, and a whistleblower, and a consumer advocacy groups brought it to their attention. So I just want... My question is, I wanna clarify, 'cause this keeps coming up about existing power of the commissioner. So in our Georgia law now, um, as far as the authority of the commissioner, is there any penalty that is specific for false and mis- misleading information as related to rate filings?

180. 0:53:54

     Is there anything that says in Georgia law that it is specific, the penalty is specific for false or misleading information?

181. 0:54:01

     Now, earlier in c- in, in this, in my testimony, I said there was, but I think you may have... Have you found something to the contrary or, or... I, I, I... My understanding is that he can fine them.

182. 0:54:11

     I, I do not believe that is specific to Georgia law. If somebody knows that. I don't know if legal counsel knows that.

183. 0:54:18

     So, so basically it's-

184. 0:54:20

     Yeah, no way

185. 0:54:21

     ... it's paragraph-

186. 0:54:22

     Specifically for false or misleading-

187. 0:54:25

     Yes

188. 0:54:25

     ... uh, information in rate filings.

189. 0:54:27

     So my understanding is the paragraph one, which you referenced, 'cause this is a new paragraph two, he does have the ability to fine them and can have the issue a refund. Paragraph two is for the willful, knowingly intentional conduct in exchange or in attempt to get a, to affect the rates, and that's where this 10 times penalty would come in.

190. 0:54:54

     Thank you, Senator.

191. 0:54:57

     Senator Harbison.

192. 0:54:59

     Are you?

193. 0:55:05

     Whoops. 12. There we go.

194. 0:55:07

     Oh, you knew about it.

195. 0:55:09

     Well, no, just... Leader Hatchett, just one question. Th- there's nothing in the code now that would, um, proscribe an insurance company willfully giving false information on which to base rates?

196. 0:55:30

     I mean-

197. 0:55:30

     Nothing as explicit as what I'm trying to do

198. 0:55:32

     ... is it the, is it the penalty that's more explicit in yours? Or is it the... I mean, there's gotta be. I would... I, I don't know the law, but I would have to think that if an insurance company knowingly and willfully provides false information on which to base a rate increase, and that there's gotta be something in the code now to handle that. And, uh, and as far as your due process you were talking about, I mean, the, didn't the commissioner recently levy fines totaling $20 million or so for violations of the mental health, physical health parity laws that we had, um, established?

199. 0:56:14

     And were there due processes there for the folks that had the fines levied against them?

200. 0:56:23

     I wasn't present for that-

201. 0:56:25

     I guess what I'm asking is, is there something already there that does what you're trying to do?

202. 0:56:29

     I don't think there's anything-

203. 0:56:29

     Except for the severe penalty

204. 0:56:31

     ... for the severity of it and the willful and wanton conduct. I think that's what I'm trying to get at, to punish the true wrongdoers.

205. 0:56:40

     Okay. Thank you.

206. 0:56:42

     And I don't know if the Insurance Commissioner's Office is here, but-

207. 0:56:45

     There, there is somebody here

208. 0:56:46

     ... they might be able to answer these questions as far as the procedural stuff better than me.

209. 0:56:49

     Yeah. Uh, I was going to request that since we have someone from the Department of Insurance back there, from the Office of the Commissioner of Insurance and Fire Safety something, something. If you could come up and maybe clear this up as far as what the law currently allows.

210. 0:57:11

     All right. Welcome.

211. 0:57:12

     Thank you, Mr. Chairman.

212. 0:57:13

     Yeah, you-

213. 0:57:13

     Members of the committee, uh, my name is Bryce Rossen. I'm the Director of Legislative Affairs for the Georgia Insurance Commissioner's Office. Uh, I guess I'll allow the committee to answer... I'll, happy to answer any specific questions you all may have. Uh, I know y'all have talked about our specific fining authority. Uh, the, the Mental Health Parity fines that, that, uh, that we have been talking about, uh, that's found in 33-1-27. Uh, the fines for violating the Mental Health Parity Act, uh, those are set at up to, that is, so that is a cap, up to $2,000 for unknowing violations, uh, or up to $5,000 for knowing violations.

214. 0:57:49

     Uh, and we are pursuing some legislation, uh, that is being carried by our house insurance chairman that is looking at those fines, among other things. But, uh, just to answer the first question that you all may have, uh, I guess I'll allow y'all to ask any further clarification questions you have.

215. 0:58:04

     I'll, I'll just ask, is there a limitation to what he can fine from that standpoint? Or is it what you were saying, it's 2,000 or 5,000? Is there any way that he could say, "This is a million dollar fine"? Does he have any... Does he have that type of discretion? And I don't know the answer. I'm asking you.

216. 0:58:23

     When there is a, when a, a fine is specifically enumerated in the title, uh, that, that is where we're set. Uh, but for the... So you have your insurance, your general fining authority that we have, uh, and all of them right now are set at, uh, 2,000, 5,000, like I previously discussed. Uh, but when it is specifically enumerated, like in the surprise billing code, uh, uh, or just a violation generally of this chapter, that's what I believe this would fall under, uh, more in the Mental Health Parity Act. Uh, sometimes they're specifically enumerated in the law, but that is what is currently set up.

217. 0:58:54

     Is the 2,000 or 5,000 per policy holder? Or-

218. 0:58:57

     Per violation

219. 0:58:58

     ... per, per violation. So if I've got a group of 10,000 people, it's 10,000 times 2,000 or 5,000, whatever the case might be, correct?

220. 0:59:06

     Up to, correct.

221. 0:59:07

     Okay. Okey-doke. Okay, you've got a few more questions. Senator Still.

222. 0:59:16

     Hatchett. Oh, no. Randy Orrock.

223. 0:59:18

     Yeah. That's good.

224. 0:59:19

     Randy.

225. 0:59:19

     Thank you. Thank you for being here, Bryce. Appreciate you. Um, could you help me understand the current due process if a complaint comes in, whether it's to the, the mental health parity or any other complaint against an insurance company? What's the current due process to determine if the individual has violated Georgia law and therefore subject to a fine?

226. 0:59:41

     So there's, there's a number of different ways that we can go through to determine if someone is, uh, in violation of law. Uh, one of those ways is through our consumer services, uh, division. So that is, uh, every year we get about 11,000 complaints to our consumer services division, uh, across all lines of insurance. That's about the average. Uh, and we, our agents, uh, each case is individually taken a look at. Uh, and then we go in and we talk to the insurance company, we talk to the individual, uh, A, to figure out what the situation is, uh, and then C, B, to make sure that companies, they are following the contract that they signed with the consumer, uh, to make sure they are following the provisions of, of Georgia law and that contract, uh, to make sure they have, uh, given the consumer, uh, what they deserve according to their policy.

227. 1:00:23

     Uh, so that, that is one method. Of course, we also have market conduct examinations that we regularly conduct against insurance companies. Uh, these are exhaustive, multi-year examinations. Uh, we take a look at all the practices of these companies, and we have a, a vast authority in that manner, uh, to get effectively all their records and data, uh, as, as their regulator. And if we determine in, in their general actions that they have violated the insurance code, uh, then we go through, we, you know, issue fines. Uh, we'll issue the, the, the, the orders there.

228. 1:00:54

     Insurance companies, they have a chance to appeal to the commissioner. Uh, and then following that, if they still believe that they are, uh, that the fines are either excessive or unwarranted, then they can appeal further to the courts.

229. 1:01:05

     Okay. So-

230. 1:01:07

     The commissioner determines the amount of the fines, or is there an established matrix that y'all use already to determine the amount of the fines, or are the fines related to the, to the loss to the consumer?

231. 1:01:19

     Uh, there is some discretion built in there. Again, the fines are set as an up to 2,000 or an up to 5,000 currently in law.

232. 1:01:26

     But who makes the final determination of what those fines will be?

233. 1:01:29

     That commissioner by law, sir.

234. 1:01:30

     Okay. And if this were to happen, where would the, ah, in, and I were to be determined to be the insurance company at fault, and I challenge the insurance commissioner, in what court would I file my appeal?

235. 1:01:45

     Typically, uh, it would be the Superior Court of Fulton County.

236. 1:01:49

     Okay. And so have y'all, uh, since you've been there, and I, and I know you've been there with Commissioner King, um, have y'all had anybody file an appeal to the Fulton County Superior Court?

237. 1:02:01

     Not to my direct knowledge. Uh, I know that they have often appealed to the commissioner, uh, and ourselves have taken that additional step beyond just our findings. I think that is fairly common. And then we begin, uh, just that, that, that hearing process from that point.

238. 1:02:17

     And is there ever negotiation, uh, on the amount of the fine between the, the, the accused party and the commissioner?

239. 1:02:25

     Yes, sir. There can be.

240. 1:02:26

     Thank you, Bryce. Appreciate it.

241. 1:02:32

     Last one, Senator Cowsert.

242. 1:02:34

     Senator Cowsert.

243. 1:02:34

     Thank you, Mr. Chairman. Does the insurance, uh, commission have a problem with people being dishonest in front of it in the rate making sphere?

244. 1:02:43

     Of course. Uh, if, if we came to uncover, and I know it was a question, uh, if this is happening in the state of Georgia, again, I would say this to, to my direct knowledge, I've been with the Insurance Commissioner's Office for the last four years, uh, two years in this specific role, and I have not come across a situation where an insurance company has blatantly lied, uh, on their, their rating, uh, rate filings with our office. So it, of course, we would have a, a big problem, uh, with these companies if they did bold face lie to us.

245. 1:03:11

     No, I'm not saying would it be a problem. I said, I'm saying has it been a problem? Has the commissioner fined anybody for giving untruthful information in the rate setting, uh, world in the last four or five years?

246. 1:03:26

     The, my question would be, uh, are you asking a, like, a willful or a did they provide us information that we had to go back and ask them for clarifying? 'Cause that, that can sometimes happen.

247. 1:03:35

     Have, have, have you fined anybody? You got the power to go up to 5,000. Has anybody been dishonest enough that the commissioner's fined them in the last five years?

248. 1:03:43

     Not purely for being dishonest, no, as far as I'm aware.

249. 1:03:47

     All right. Thank you. Okay, we're gonna close out this bill. Thank you for that, Bryce.

250. 1:03:54

     Thank you.

251. 1:03:54

     And Senator Stills, do you wanna present from your position there? Would you like to present from there?

252. 1:04:01

     Thank you, Chairman. I would like to present from my desk to save two seats up front for a couple of friends from the, uh, Community Associations Institute, Shawn Rucker and Julie Howard, if y'all would, uh, just be there. They're, they're here for, for support and backup if needed. Um, this hopefully is a, is an easy bill. Uh, this committee heard this bill last year, passed it favorably. It just didn't make it across the finish line. Um, but this is Senate Bill 230, which is LC 55-0489. If you flip to, uh, the second page, um, what this does is it strikes lines 28 through 30.

253. 1:04:37

     What that does is it, uh, eliminates the current statutory cap on the maximum insurance deductible that condo unit owners, uh, might be required to pay under their association insurance policies. So it just allows the condo association to be more competitive by taking away that cap. Um, and this was brought forward from the industry last year with full support from the industry, uh, and people from, uh, from the industry in general. Um, and, uh, we didn't have any negative comments, question, feedback, but certainly happy to discuss that and would love for our friends to add a...

254. 1:05:16

     I know that we're running short on time, but wanted to be able to give y'all an opportunity to give your perspective on it as well.

255. 1:05:20

     We got, we got... We have a question that's popped up. I was gonna say, do we wanna let them present?

256. 1:05:25

     Well, let's, let's them present first and see if that addresses the question.

257. 1:05:28

     And then we'll take the question.

258. 1:05:28

     Great. Thank you.

259. 1:05:29

     Very good.

260. 1:05:30

     Great.

261. 1:05:30

     Thank you. Introduce yourself, where you're from.

262. 1:05:32

     Okay, great.

263. 1:05:32

     And, uh, we'll get-

264. 1:05:33

     Uh, thank you, Chairman Harmon and members of the committee. We appreciate the opportunity to be back again this year and to address this bill. I am Julie Howard. I m- I'm here as a volunteer for the Community Associations Institute. My professional paid life is as an attorney representing condominium and homeowner associations across the state now for over 30 years, and Shawn is a qualifying broker for a professional management company. He is also, also a professional community association manager through CAI and certified in insurance and risk management.

265. 1:06:07

     Um, we are happy to answer-

266. 1:06:08

     And an insurance agent.

267. 1:06:09

     And an insurance agent.

268. 1:06:10

     Yeah.

269. 1:06:10

     He's got a long list of quali-

270. 1:06:12

     Yeah.

271. 1:06:12

     I'm just a lawyer.

272. 1:06:13

     Yeah.

273. 1:06:14

     So, um, so we, um, the big picture here is that the Georgia Condominium Act requires c- all condominium associations to ensure the full insurable replacement cost of all buildings and structures in the condominium community. That is-premium for that insurance is paid for by all of the owners through their assessment. In 2013, this current cap of $5,000 was set, and the market has changed in these 13 years.

274. 1:06:48

     And condominium associations cannot afford and find a reasonable premium for that insurance they're required to carry with a $5,000 cap on the deductible per unit. So if one unit, for example, has a fire in the condominium and it, the cost to repair and reconstruct exceed the $5,000, um, the association h- will have to cover whatever the deductible they do secure is, and then the insurance will pay out.

275. 1:07:24

     But they can't get a deductible at this point in our lifetime for $5,000 at a reasonable cost. And so this bill overriding purpose is to help associations find affordable insurance, which benefits every owner in the condominium, because they are the ones that pay that premium for the master policy. And what happens is if they don't, if they do have to pay for an, an amount between $5,000 and the more typical premiums now are 10 or 25 most commonly, if they don't have insurance for that gap, then they have to specially assess all of the owners in the condominium to make up that difference.

276. 1:08:09

     Many of them are having to take from reserves to fund that gap. And so our goal is to prevent the surprise of a special assessment for that gap that's not insured, and to make the premium overall more affordable. And, and Sean will speak to this, owners can insure for the master policy deductible at a much more affordable rate than the association can insure for the entire community, uh, with a lower deductible.

277. 1:08:43

     Let me add that, uh, most associations have a higher water deductible already, so, uh, that's not governed by this $5,000 cap. Uh, most condominium owners have what's called an HO6 or personal policy to cover their contents, deductible, any betterments and improvements, that kind of thing. Uh, they, most of them already have the insurance to cover this deductible.

278. 1:09:13

     So we're not seeing, we're not, uh, looking at a lot of, uh, increase in cost for, uh, unit owners through their personal policy. We're just looking at, um, having insurance for this extra part of the deductible that the association has to assess for. Right now, it's not covered by the master policy, and the law prevents it from being covered by, uh, the HO6 policy. This would fix that to a degree.

279. 1:09:41

     Okay. Understood that. 'Cause they, the assessment coverage under the HO6 is where the, the owner is going to go for their money as far as that. This is really for the association itself that you're-

280. 1:09:53

     Yes, sir

281. 1:09:53

     ... talking about raising.

282. 1:09:54

     Correct.

283. 1:09:54

     That's correct.

284. 1:09:55

     Okay, dope. Senator Merritt, please.

285. 1:09:57

     Yes, Mr. Chairman. I have a few questions. Uh, so is it not true that the association will be able to raise, if we remove this cap, they will be able to raise it to whatever they like, right? So it's 5,000 now. They might say, "Hey, we need to make an assessment at 20,000." Is that correct? Would they have the authority to do that?

286. 1:10:15

     The-

287. 1:10:15

     Well-

288. 1:10:16

     ... deductible?

289. 1:10:16

     Yes.

290. 1:10:17

     Right. So what's happening is they can't buy... It, it's the deductible that is the cap. They're not able to get reasonably affordable insurance now anyway with a $5,000 deductible. You have, I think you have the-

291. 1:10:31

     Yeah

292. 1:10:32

     ... statistics.

293. 1:10:32

     So, um, they have to go with what they have, what's registered with the insurance commissioner. They can't just, the, the insurance car-

294. 1:10:40

     You're talking about the association.

295. 1:10:42

     Right. The carrier can't just come up with a deductible that they want. It has to be registered with the insurance commissioner already. Uh, but what we're asking for is $25,000. Um, that would be a, a, a better cap than-

296. 1:10:56

     So that's my question.

297. 1:10:57

     Yeah.

298. 1:10:57

     Why don't we just, why are we, why are we striking out the 5,000? Why don't we just raise the deductible instead?

299. 1:11:02

     Well, one thing that happened is this was adopted in 2013, and the cap wasn't adjusted for inflation. Add a cap, but certainly what's playing out in the market is a $25,000 deductible is-

300. 1:11:15

     That's what I'm saying

301. 1:11:15

     ... pretty high.

302. 1:11:16

     Why don't we just raise the cap to 25?

303. 1:11:16

     But, but homeowners-

304. 1:11:17

     Yeah.

305. 1:11:17

     So the people deciding this are board members who are homeowners in the community, who are also going to be paying this deductible if they have a loss.

306. 1:11:27

     Okay.

307. 1:11:27

     So this affects everybody in the community, including the people making the decision. Uh, I work with, um, hundreds of, of associations, and they don't wanna raise their deductible, um, past what people can afford.

308. 1:11:43

     Right.

309. 1:11:43

     Uh, they don't wanna raise it past what people can get coverage for with their HO6 policy. Uh, that is the goal, and right now they're having to pay out of pocket for this deductible that can't be charged to the unit owner.

310. 1:11:59

     Okay, one more question, Mr. Chairman.

311. 1:12:00

     Yeah.

312. 1:12:00

     So how do we ensure, and this is my concern, that we are not pricing homeowners out of that deductible? Like, you know, we're putting undue burdens on them by raising that deductible, so how are we ensuring that the homeowner is being protected? I understand the association is trying to cover, but-

313. 1:12:16

     Right

314. 1:12:16

     ... what happens with the homeowner if they can't afford that deductible? I mean, so how are we, how are those protections-

315. 1:12:20

     Home- homeowners have the HO6 policy that covers this deductible. Most of them already have coverage for it anyway because of the water deductible, so that's where that, that coverage is

316. 1:12:34

     And, and, and it's more, uh, it, it is more affordable, it would be more affordable to get insurance through your HO6 to cover the master policy deductible than to pay a special assessment where the gap exists between the $5,000 current cap and what most associations are carrying for the required fire and extended coverage in a deductible. And so that's what we're trying to make up for here, is to prevent a gap in what can be assessed back to the owner, um, where they could otherwise insure.

317. 1:13:11

     Because right now-

318. 1:13:13

     Mm-hmm

319. 1:13:13

     ... they're, they may not be carrying insurance-

320. 1:13:16

     Okay

321. 1:13:16

     ... for a $25,000 deductible.

322. 1:13:16

     Yeah. So right, right now, um, as a homeowner who's not affected by a loss, I'm also the president of my own condo association, um, and we had a loss in our community, a, um, that a fire happened and, um, the deductible was 25,000. And, uh, the rest of us all had to pay because we could only assess that one unit owner $5,000. So I paid, my neighbor paid, the rest of us in the community paid for that deductible and we had to give it to this owner from our personal pocket to pay for their insurance claim because of the way the law is.

323. 1:13:58

     If, if we had an increase or a reduce or eliminated the cap, they would have that coverage on their HO6 policy-

324. 1:14:05

     Okay

325. 1:14:05

     ... and it would be covered by insurance.

326. 1:14:07

     Okay. I'm, I'm gonna do this, uh, I'm gonna cut short just a little bit 'cause we've got some, another committee coming up. Uh, Senator Hodges, one more if you will for me please.

327. 1:14:15

     One quick question. Thank you, Mr. Chairman. Would, um, how would this affect, if we do this, how will this affect the HO6 premiums? Um, will they go up in an amount, in an amount that kind of is this... I mean, are there real savings here to do this?

328. 1:14:32

     Right. So most association, uh, already, most associations already have a water deductible that's higher, which is around 25,000 or so. So they already have that coverage. Uh, this would be the same, so we're just meeting what they have. So they're not gonna s-

329. 1:14:50

     The fire, yeah, the fire and extended coverage-

330. 1:14:50

     And is the one, is-

331. 1:14:51

     ... doesn't cover water

332. 1:14:52

     ... so if you have fire, I mean, can you use, are the deductibles interchangeable? I mean-

333. 1:14:56

     Yeah. With, with the, um, with the HO6 policy, yeah.

334. 1:15:01

     Okay.

335. 1:15:01

     They can be interchangeable. Um, if the, they have coverage for the water deductible for deductibles, dwelling coverage A, uh, that applies-

336. 1:15:10

     Mm-hmm

337. 1:15:10

     ... to any deductible that has to be paid by, um, for the, for that unit.

338. 1:15:15

     So this would not cause an increase in HO6 premiums, the owners, the condo owners would be in better shape?

339. 1:15:24

     Correct.

340. 1:15:25

     Absolutely.

341. 1:15:25

     Thank you.

342. 1:15:25

     Yes.

343. 1:15:26

     Absolutely.

344. 1:15:26

     Okay. All right. Uh, Senator Lucas, quickly please you. You

345. 1:15:31

     Yeah. That, uh, uh, my question is

346. 1:15:38

     aren't the units set a design whereas each unit is worth so much and then you submit it to an insurance company and ask them for a bid to give you a price on?

347. 1:15:54

     Well, the, uh-

348. 1:15:55

     I mean-

349. 1:15:55

     ... the, the, the association is carrying what's termed in the condo act the full insurable replacement cost for all buildings and structures. So they're, the property policy that the condominium association is required by statute to carry has to be enough to reconstruct, uh, and insure for under f- the fire and extended coverage portion all insurable improvements.

350. 1:16:22

     But, so y- you're trying to tell me that you don't assess each one of the owners-

351. 1:16:29

     No, they-

352. 1:16:30

     ... part of the cost to replace the value?

353. 1:16:34

     No, they do. That's in the assessment. That's part of their budget every year. Uh, they pay for the insurance premium for the entire property.

354. 1:16:43

     Yeah.

355. 1:16:43

     So they're paying that already.

356. 1:16:45

     All right. So, so if they're paying, why do we need to change, change the law-

357. 1:16:51

     Well, the-

358. 1:16:51

     ... to the 25,000?

359. 1:16:52

     With the, with the current, um, because associations are not able to get insurance for the full replacement cost of all buildings and structures with a $5,000 deductible. It's not a, you can't get that r- for a reasonable price.

360. 1:17:10

     It's not available in the marketplace-

361. 1:17:12

     Yeah

362. 1:17:12

     ... in most s- situations where we have condos with commercial policies.

363. 1:17:17

     Well, m- my question is if, if you're talking about the replacement cost-

364. 1:17:21

     Mm-hmm

365. 1:17:22

     ... you submit it to, uh, Alfa or any insurance company.

366. 1:17:28

     Mm-hmm.

367. 1:17:30

     They will give you a price on the total premium to me, and you would divide it between all of the owners.

368. 1:17:38

     Yes. That's already done through the budget and the assessments.

369. 1:17:41

     This is just the deductible-

370. 1:17:42

     This is the-

371. 1:17:43

     ... that we're talking about

372. 1:17:43

     ... this is the deductible here, and the issue is the fact that we can only charge $5,000 per the law, where many of these deductibles are much higher than that. The average is about 25,000, 15 to 25, and we don't have insurance coverage for that because, um, the limit is $5,000. If you take away that, there's insurance coverage. But right now, folks are having to be assessed an additional amount beyond what they already pay to cover that deductible because we can't assess it to the unit owner.

373. 1:18:23

     Okay.

374. 1:18:23

     It's very confusing, I understand.

375. 1:18:25

     Yeah. It, it, it is, it is.

376. 1:18:26

     Yeah.

377. 1:18:26

     Even for somebody in the insurance business it is.

378. 1:18:28

     Yeah.

379. 1:18:28

     Um, real quick, quick question, then I'm gonna come back.

380. 1:18:31

     Yeah. Thank you, Mr. Chairman. How are they assessing it without-

381. 1:18:34

     Is that a policy thing? Are they doing it against the rules? If it's set at 5,000, how are they assessing that legally right now then?

382. 1:18:42

     The, the people are paying-

383. 1:18:43

     Did I hear that correctly?

384. 1:18:44

     ... out of pocket. Yeah, so like Shawn had to pay out of pocket to cover that gap. They're being, they are being specially assessed and all of the owners are being specially assessed, even if one unit owner had the loss.

385. 1:18:57

     And they can do that now under current law? But-

386. 1:19:00

     If their documents allow for it. Even that has problems, because different governing documents say different things about how a condominium association-

387. 1:19:09

     Okay

388. 1:19:09

     ... can adopt a special assessment.

389. 1:19:11

     Okay.

390. 1:19:11

     So that's another problem, um, that

391. 1:19:14

     So if, if, if the, i- the $5,000 had not went up to what you estimate it'd be 25,000, it would've been okay for the... But if it had affected the homeowners, would you have been seeking to, uh, get a raise to cover that as well? What, is what I'm saying. The $5,000 you say it do- doesn't work anymore, you need to go to 25, it's to the homeowners association, not the individual homeowners, or is that all intertwined in where you can't-

392. 1:19:43

     It's all together

393. 1:19:44

     ... you can't unmangle it?

394. 1:19:45

     Yes.

395. 1:19:45

     Yeah, it's the same thing.

396. 1:19:46

     Okay. I get it.

397. 1:19:46

     The homeowners are the association.

398. 1:19:48

     Okay.

399. 1:19:48

     Yeah.

400. 1:19:49

     All right. Senator Shawn Still, yes.

401. 1:19:52

     So

402. 1:19:56

     the version that we're working on right now is not the... A lot of the same conversation, this is very deja vu moment, and I think Senator Merritt kind of tipped on it. We, the, I, I found the amended version that, that we had. So the version that we have in our folders is the original bill. But the way we had amended it, because of the same conversation that I think we've all been having, is we amended line 29.

403. 1:20:28

     Uh, instead of all that being struck through, all we did was strike through the number 5,000 and replace it with 25,000. And then for the clarification, uh, for what Senator Harbison, Senator Lucas, and Senator Merritt all pointed out, was we added the following language after line 32, and it says, "Each association in this state shall timely notify all unit owners within such association of any material change in such association's master policy deductible.

404. 1:21:03

     Such notification shall be in writing and accomplished by de- depositing the notice in the United States Mail to be dispatched by at least first-class mail to the address of record of the unit owner. Such notice may alternatively be delivered with the unit owner's written consent in person or through electronic transmission or facsimile." Effectively what we're saying is we're putting the cap back in, which goes from five to 25, and then we're saying that every association has to, in a timely fashion, notify all unit owners.

405. 1:21:36

     That is the final, um, version that we had passed out of committee when Senator Walker was chairing. That was the amended version, but that's not the version that we have in our folders. But that language was in our final, um-

406. 1:21:53

     So that's-

407. 1:21:54

     ... version.

408. 1:21:56

     Okay.

409. 1:21:56

     So we passed that by committee sub.

410. 1:21:58

     And we should, that's what was recommitted to this committee, would be the committee sub that we passed.

411. 1:22:03

     What I just read.

412. 1:22:05

     So we-

413. 1:22:05

     What we have in our folder is the original bill, but we had committee subbed it to what I just read.

414. 1:22:09

     Yes. And we had a lot of de- ... Our, it's coming back to me. We had a ton of discussion about it. Um.

415. 1:22:15

     Do we fix that by an amendment?

416. 1:22:19

     No.

417. 1:22:19

     No. It's-

418. 1:22:20

     It's already there

419. 1:22:20

     ... I think we just have the wrong bill in the folder.

420. 1:22:23

     Yep. 'Cause I remember this conversation going on.

421. 1:22:26

     Yes, you do.

422. 1:22:26

     Okay, let me, uh-

423. 1:22:27

     It would make sense to come back at the next meeting with the correct version of the bill.

424. 1:22:31

     With, with that committee sub that I just read?

425. 1:22:33

     Yeah.

426. 1:22:33

     Yeah.

427. 1:22:34

     I think that-

428. 1:22:35

     But for the senators that had raised those questions, does this, do you th- uh, without holding you, c- just for discussion, does that satisfy your concerns with the bill as, as stated?

429. 1:22:48

     Yes.

430. 1:22:49

     Well.

431. 1:22:49

     Senator Merritt.

432. 1:22:50

     I'm not a condo owner.

433. 1:22:52

     Yeah.

434. 1:22:53

     But, you know, when, when you're dealing with it, you know, I've, uh, you know, I've always submitted to an insurance company. Say I got a million dollar house insured. I submit it to the insurance company, they determine what the rate gonna be and what they gonna pay. And so what I'm looking at, at is if you got, uh, condos, it would take the total value of what it costs to replace that thing, and then it would be split up between the condo owners if they stay at the condo.

435. 1:23:23

     That's correct. Yep, yep.

436. 1:23:24

     Oh, I did have a question. So HO6-

437. 1:23:27

     Hold, hold on just, hold on just a sec. Ho- hang, hang on just a sec.

438. 1:23:30

     Uh, it's, uh, yeah, 11.

439. 1:23:32

     Yeah, ho- hold on just a second. Let me... Here, here's, here's what I would say is this, and I, and I, being in the business, what they don't understand is there's a condo association-

440. 1:23:40

     Mm-hmm

441. 1:23:40

     ... and they re- they insure the entire building.

442. 1:23:43

     Exactly.

443. 1:23:44

     We're raising the deductible so that the owners of the condo, their policies can activate because we're raising the deductible, and it could not activate unless we raise the deductible, which is where we were on this committee sub. So what I'm going to propose is this: We will come back with our committee sub, which is there and fixed via your, your, your last, uh, our last meeting, and then I think we're, we're, I won't say beating the dead horse, but we, we, we come to that, 'cause this really benefits, it benefits the condo owners.

444. 1:24:19

     It does not hurt them.

445. 1:24:20

     Yes.

446. 1:24:20

     But it allows their insurance to activate, that it could not activate otherwise.

447. 1:24:25

     Exactly.

448. 1:24:25

     That's correct.

449. 1:24:26

     Exactly.

450. 1:24:26

     Yes, sir.

451. 1:24:26

     It helps everybody.

452. 1:24:28

     Yeah.

453. 1:24:28

     It really does.

454. 1:24:29

     I, I know we got folks that got, that got... So we will pick this up on the nas-

455. 1:24:33

     Okay

456. 1:24:33

     ... next one. I'm sorry.

457. 1:24:34

     That's okay.

458. 1:24:34

     Uh, we picked that up, correct, and we will, uh, dismiss... You had a-

459. 1:24:39

     Was the dead horse who were being insured?

460. 1:24:41

     No, that, yeah, and not, yeah, yeah, that horse was insured. Un-

461. 1:24:43

     Thank you. Thank you for your time.

462. 1:24:45

     Thank you.