Allstate uses 'loophole' in Georgia law to raise rates by 25%
The 'loophole' allowed the auto insurer, which has raised rates 40% this year, to bypass the state insurance commissioner in implementing rate increases.
Georgia Insurance and Safety Fire Commissioner John F. King has released an alert for consumers that Allstate Property & Casualty Company has filed an overall statewide automobile rate increase of 25% on their policyholders in the state.
Georgia has a dual-rate filing system that governs automobile insurance rates established in Georgia State Law. Under the system, the insurance commissioner only has the authority to approve or disapprove minimum limits policy filings, while all other filings can go into immediate effect under what is known as “file and use.” The Allstate rate increase falls into the “file and use” category, not requiring the commissioner’s approval or disapproval.
In a statement, King said that he was “angry and disappointed that Allstate has chosen to exploit a loophole in state law to implement such a substantial increase in costs on hardworking Georgians when families are already struggling with historic inflation everywhere from the gas pump to the grocery store. . . . This latest increase means Allstate has now bypassed our office to raise overall rates in Georgia by 40% in this calendar year alone. In response, I have begun conversations with our legislative leaders regarding changes to state law to give our office additional authorities to protect consumers from these types of inexcusable actions.”
The rate increase will be effective for new Allstate customers in the state on September 12, 2022, and current customers will see the increase in their renewals beginning October 16. The Office of the Commissioner of Insurance is encouraging Allstate policyholders to reach out to the insurer to discuss the reasons for the rate hike and ask about other available options.
Insurance Coverage Law Center editor’s note: According to this recent PropertyCasualty360.com article, in the decade prior to the pandemic, new car prices saw a 3% average annual increase, and prices spiked 17.2% between 2020 and 2021. Auto insurance premiums have risen along with car prices, as the increased cost of vehicle repair and replacement has forced carriers to compensate for lost profits. It is expected that auto insurance rates will go up an additional 12% in 2023. Allstate, though, seems to be taking advantage of Georgia law and policyholders, implementing a 40% rate hike in one calendar year.
The National Highway Traffic Safety Administration announced in May that the estimated number of traffic fatalities for 2021 rose by 10.5%, which is the largest increase since 2005. In 2020, fatalities were 7.2% higher than in previous years. While Americans drove less during the pandemic and insurers were pushed to reduce rates, results are showing that reduced driving did not result in increased safety. Regardless, a 40% rate hike in one year with increasing inflation is an extraordinary position to take.
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