Georgia Insurance Commissioner Ralph Hudgens issued a rare “consumer alert” on Monday after Allstate Insurance filed for a 25 percent auto insurance rate hike that will take effect May 22.
Hudgens said the 25 percent increase is the average rate change, but “many policyholders should be prepared to see a rate change as high as 58.3 percent.”
At the end of 2015, Allstate had 11 percent of the auto insurance market in Georgia, making it the second-largest insurer in the state, behind State Farm. It is the first time Hudgens has issued such an “alert.”
“I am deeply concerned about this filing and the impact it could have on consumers,” Hudgens said. “Georgia law prohibits me from stopping or delaying this increase unless an actuarial examination proves the rate to be legally excessive.”
Hudgens directed his staff to initiate a “professional level examination” of the Allstate filing to determine whether the rate increase can be defended. If Allstate’s rate increase is deemed “excessive,” Hudgens said he intends to act.
“Georgia adopted a ‘file and use’ system in 2008 to promote competition and lower rates among insurance companies,” Hudgens said. “This rate filing appears to promote neither.”
Before “file and use,” commissioners had to approve increases. Under the 2008 change that Hudgens supported as a state senator, the commissioner can review the rate changes after they’re made to make sure they aren’t either excessive or inadequate to keep the company in business, and to make sure they aren’t discriminatory.
The commissioner at the time, John Oxendine, warned that it would lead to a spike in auto insurance rates.
Allstate Corp., the largest publicly traded U.S. car and home insurer, said in February that fourth-quarter profits fell nationally on a surge in auto claims.
Allstate spokesman Adam Polak said in a statement, “By offering a broad range of innovative protection options, Allstate provides strong value to our customers.
“We adjust rates very carefully to charge properly for the risk we assume and ensure our ability to protect customers from life’s uncertainties,” he said. “This particular rate filing applies to one of Allstate’s three underwriting companies in GA and represents less than half our auto insurance business in the state.
“We work closely with state departments of insurance whenever we adjust our rates and look forward to a continued dialogue with the Georgia Department of Insurance. “
The Atlanta Journal-Constitution reported last year that auto insurers were getting their largest rate increases in a decade, with some filing more than two rate hikes in a year. The result: Georgia led the nation in 2014 with the highest overall increase in personal auto insurance rates. The state ranked second overall in 2013.
Hudgens, a former Senate Insurance Committee chairman, has also been heavily backed by the industry over the years. Hudgens said last year that he doesn’t even look at any proposed rate hikes unless they are above 10 percent.
Allstate’s proposal was a rate increase so large it caught his attention.
Rate bump for Georgia drivers
Allstate Insurance, Georgia’s second-largest auto insurer with 11 percent of the market, has filed for a 25 percent average rate hike. For some, state Insurance Commissioner Ralph Hudgens said, the increase could be as high as 58.3 percent. Hudgens cannot review the change until after it takes effect May 22
Recent auto insurance rate increases in Georgia
- 2014: The state’s top 10 auto insurers had overall rate increases of 8.6 percent, the nation’s largest boost in rates.
- 2013: The increase for those top insurers was 4.9 percent, the nation’s second-largest bump in rates.
- 2012: The increase was 5.5 percent, ranking sixth among the states.