In an illustration of legislative sausage making at its finest, the legislature passed and yesterday the Governor signed into law, a bill that gives the insurance industry and the trial lawyers pieces of what they wanted this year, over the opposition of the State Insurance Commissioner.
Senate Bill 276 does two things.
First, it relieves insurance companies of requirement of getting preapproval from the Insurance Commissioner for premium increases. That sounds bad, but with about 500 insurance companies selling auto policies in Georgia, market forces should be a restraint.
When the Insurance Commissioner can hold premium increases hostage, the insurance companies must pay homage to him. Think campaign contributions to an Insurance Commissioner who wants to run for Governor.
Second, the bill authorizes stacking of uninsured / underinsured motorist coverages completely on top of the tortfeasor’s liability coverages. Up until now, if the person who hit you had $25,000 liability coverage and you had $25,000 UM coverage, his 25K would cancel out the 25K you paid for, and you could collect nothing from the coverage you purchased. Starting 1/1/09, auto insurance policyholders will be able to choose either stacking or non-stacking UM coverage. If you choose stacking UM coverage, then if the person who hits you has 25K and you have 25K, and you have a 50K injury, then you can collect 25K from both for the full 50K. Or you can choose to save about the price of a hamburger and fries on your premiums and purchase the non-stacking UM coverage.
Our Insurance Commissioner opposed this too. There are some "non-standard" auto insurance companies that seldom have to pay UM claims since they only write 25K minimum limits policies, and their UM coverages are always canceled out by the liability coverage of any tortfeasor who has any insurance at all. Think campaign contributions.
So the insurance industry and the trial lawyers made sausage, with the help of Republican legislators, over the opposition of the Republican Insurance Commissioner who wants to run for Governor, and the Republican Governor signed it.
Don’t you just love politics?
The full text of SB 276 is copies below.
Senate Bill 276
(b) Sections 3 and 4 of this Act shall become effective on October 1, 2008.