Lambs Lying with Lions
SB 276 Shows Cooperation Across the Aisle
By Stacey D. Kalberman

During the current Presidential campaign, the public has heard its share of rhetoric regarding the need for Republicans and Democrats to reach across the aisle. In the 2008 session of the Georgia General Assembly, it appears that the trial lawyers and the insurance industry actually did. SB 276 addressed changes in the Uninsured Motorist law which resulted in something for both sides.

SB 276, which was signed into law by Governor Purdue on May 15, 2008, amended two sections of O.C.G.A 33-7-11: first, the legislation clarified the issue of whether the uninsured motorist statute applies to umbrella policies with underlying personal passenger auto coverage; second, SB 276 provided an option permitting policyholders to purchase uninsured motorist coverage limits equal to their limits of liability and without offset of recoveries from other sources.

OCGA § 33-7-11 requires uninsured motorist coverage to be offered on all automobile liability policies sold in Georgia. In 2006, the Georgia Court of Appeals in Abrohams v. Atl. Mut. Ins. Agency, 282 Ga. App. 176, maintained that the requirement under OCGA § 33-7-11, applied not only to primary auto policies, but also to umbrella policies with underlying primary automobile coverage. Overturning the lower court ruling, the Court of Appeals stated that “absent express direction from the legislature,” there was no exemption for umbrella or excess policies under the uninsured motorist statute. SB 276 provided the “express direction” needed to exclude umbrella policies from the requirements of the uninsured motorist law by affirmatively stating that the UM coverage required under section (1) of OCGA § 33-7-11 excluded umbrella or excess liability policies unless specifically provided for in the policy at the request of the insured.

SB 276 also provided Georgia consumers the option to purchase uninsured motorist coverage providing full policy limits without an offset from other available coverage. Under the prior version of OCGA § 33-7-11, recovery for an uninsured motorist claim through the policy of the not at-fault party was reduced by available coverage from the at-fault party, regardless of the available limits under the not at-fault party’s own policy.

SB 276 added an option to section (b) of OCGA § 33-7-11 which permits policyholders to purchase full limits UM coverage. Recoveries for UM coverage under this option are not offset by recoveries from available at-fault coverage.
Section (b) of OCGA § 33-7-11 requires all insurers to provide notice to private passenger auto policyholders of the new UM option. The notice is required to be sent to all insureds who have policies in effect after January 1 of 2009 and who have not rejected UM coverage in a previous policy. In a Bulletin to all P&C companies issued by the Georgia Commissioner on August 18, the Department provided a sample notice for personal automobile policyholders informing them of the new UM option and giving numeric examples of the application of coverage.

If SB 276 appeared to demonstrate harmony in the passage of amendments to the UM law, its additions to the personal passenger auto rating law were somewhat more acrimonious. SB 276 amended O.C.G.A. 33-9-21(b) by eliminating the prior approval of auto rates in the range above the statutorily mandated minimum liability limits. As of January 1, 2009, insurers will continue to be required to file for prior approval of rates within minimum liability coverages ($25,000 for per person, $50,000 per occurrence, $25,000 property damage). However, rates above the minimum liability limits will become “file and use”, permitting insurers to place the auto rates into effect prior to the approval of the Commissioner. Interestingly, the Department has advised in its August 18 Bulletin that the law as written “is mutually exclusive” necessitating two separate filings: one rate filing for minimum limits and one rate filing for limits above the minimum.

Commissioner Oxendine has predicted that the change in the rating law will result in millions of dollars in auto insurance increases for Georgia citizens. Others, including several consumer advocacy groups, disagree. Those in favor of the change to a “file and use” rating scheme believe that premiums will be reduced because insurers will have the ability to respond more quickly to changes in the marketplace without the additional waiting period imposed by prior approval. An additional fact for consideration is that a majority of the states have already moved away from prior approval to either a “file and use” or a flex rating scheme. Whatever the result, the proof will be in 2009 and beyond.

Stacey D. Kalberman is Of Counsel in the firm’s Insurance Practice. Stacey concentrates her practice in regulatory matters for alternative risk programs, including insurance captives, risk retention and purchasing groups. Stacey received her bachelor’s degree from George Washington University and her law degree from Emory University School of Law.

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