New bill introduced to keep auto insurers from raising rates without approval from the state

ATLANTA — A new bill introduced in the state legislature would end a provision of state law that allows auto insurers to raise rates without approval from state regulators.

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“This is just an issue of fairness to the consumer,” Georgia Insurance Commissioner John King told Channel 2 Consumer Investigator Justin Gray.

King calls it a loophole of Georgia law.

Back in August, he called out insurance giant Allstate for using that provision to raise rates dramatically on Georgia consumers. King told Gray at the time that he would look for a legal fix.

Now this week, House Insurance Committee Chairman Eddie Lumsden introduced legislation that would ban the practice called “file and use.”

Allstate used the practice to raise insurance rates a total of 40% in less than a year in 2022.

“One company is primarily taking advantage of this. My concern is if we don’t close this loophole, other companies will be forced to follow the same methodology to increase rates without coming to this office and negotiating. They can just change it overnight,” King said.

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Gray checked with the state on the numbers.

Since Allstate’s most recent 25% increase last fall without state approval, other major insurers have been approved for increases by the Insurance Commissioner.

But those rare increases were much smaller. Just under 10% for American Family, Geico and Progressive, and about 13% for State Farm.

Gray asked Allstate for comment.

They sent Channel 2 Action News a statement, reading:

“Georgia passed its unambiguous auto insurance law 15 years ago by broad bi-partisan majorities in both the House and Senate, and Allstate has followed it to the letter ever since. Our rates are competitive despite all the factors causing them to go up across the insurance industry…”

Channel 2 Investigates has done a series of stories in recent years on customers who had trouble getting Allstate to pay up after a crash.

It took Tesha McGee two years and a jury trial.

“These people have the money to pay, and they just want to ring you out until there’s no more juice left,” McGhee said.

And an Allstate insider, former Allstate staff attorney Laura Johnson Bailey, told Channel 2 that Allstate policy is to make low ball offers.

“Allstate’s the worst. Easily,” Bailey said.

Commissioner King says his office has had trouble getting paid by Allstate too. Her just sent a fine and demand letter to Allstate subsidiary National General for thousands of dollars in unpaid premium taxes.

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“If the state of Georgia gets treated this way just imagine how their customers get treated. They haven’t answered our phone calls, they haven’t answered dour inquiries,” King said.

Allstate also referred us to an industry trade group, the Insurance Information Institute who says find and use is “not a loophole.” Mark Friedlander from III telling us in an email, “This is a common practice throughout the U.S.”

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