Georgia Insurance Law is About to Get an Upgrade With Multiple Changes

A Georgia bill that would bring larger insurer fines, more fraud enforcement and more wind-mitigation funding now moves to state Senate, where it is expected to pass in the next few weeks.

The Georgia House of Representatives late last month approved, by an overwhelming majority, House Bill 1344, which has been endorsed by an insurance agents’ group, by a national carrier group, and by state regulators. The measure is ostensibly aimed at making property insurance more affordable, and it would affect much of the industry, including carriers, agents and policyholders.

The main sponsor, Rep. Matt Reeves, R-Duluth, called it “the strongest insurance legislation in the country.” Leaders of the Independent Insurance Agents of Georgia and of the American Property Casualty Insurance Association have worked with Reeves and other lawmakers to draft the bill over the last six months.

“We commend Speaker Burns and House Leadership for taking an approach that will protect consumers and tackle loss drivers that impact affordability for Georgia families,” said IIAG CEO John Barbour.

Here’s a look at some of the key provisions:

Auto fraud. The bill, if signed into law, would specifically outlaw “cappers” or “runners” who steer auto accident victims to health care providers, a practice that has become increasingly familiar as auto insurance fraud has burgeoned in Georgia and other states. Likewise, clinics and doctors would be barred from compensating runners.

Violations of the law would be considered felonies, subject to as much as 10 years in prison and $200,000 fines. People involved in making claims for staged accidents would face fines of up to $100,000.

The state insurance commissioner would be authorized to hire prosecutors, appointed by district attorneys. Lawmakers may appropriate funds, but some funding would come from new, $100 to $200 annual fees on captive insurance companies.

“We always welcome any effort to address fraud,” said APCIA’s Ron Jackson.

The bill also would raise fees for motorists who let their insurance lapse.

For carriers. Property insurers would be forbidden from drafting policies that require insureds to file claims lawsuits within two years after the date of the loss. Most insureds now have up to four years to file suit. The restriction would not apply to liability and workers’ compensation coverage.

In rate filings, the Office of the Commissioner of Insurance (OCI) would, for the first time, be able to consider a wider range of information, including complaints against carriers. On the House floor last week, Rep. Jasmine Clark, D-Lilburn, asked about insurers repoprtedly dropping homeowners who have large trees near their homes. Reeves said that under current law, regulators cannot consider complaints, litigation, penalties and investigations into insurer conduct when reviewing rate filings.

Under HB 1344, “if companies are requiring people to cut down trees too much, the insurance commissioner can say, ‘Stop that,'” Reeves said.

Carriers that engage in unfair trade practices would see potential fines increased by fivefold, up to $5,000 per violation. Insurers and persons that violate cease-and-desist orders would see penalties increased to as much as $15,000 per violation.

“Some of fines were so old and so low—decades old,” Reeves said. “We increased the fines to comport with our sister states and make them 2026 numbers.”

The bill also would require counties and municipalities to annually file reports with the OCI showing how local tax revenue paid by insurers has been used to promote homeowner and auto premium decreases through safety initiatives, fraud prevention and other measures. Georgia law allows local governments to tax gross premiums at 2.5%.

Auto insurers also would be able to keep certain drivers off of policies. “An insurer may exclude a named individual from coverage under a motor vehicle insurance policy, provided that such insurer identifies such named individual as an excluded driver to the Department of Revenue,” the bill reads.

For agents. The bill would codify what has long been the regulated practice in Georgia: When a policyholder suffers a loss in a catastrophic event, he or she would need only to let the insurance agent know. That serves as notice of a claim to the carrier, and the carrier then would have 15 days to acknowledge and 60 days to affirm or deny the claim.

Barbour said that agent-notification provision is already in state insurance regulations and would not create errors and omissions concerns for agents.

“That does not mean that the agent must be responsible for filing the claim,” Barbour said in an email. “Many times, independent agents do file claims for clients, but insureds can also initiate a claim with the carrier as well. An agent may counsel a client on the wisdom of filing a claim, and an insured may determine that filing a claim may not be necessary.”

While industry groups worked closely with lawmakers to revise earlier versions of the bill, the 60-day claim denial deadline may prove to be a sticking point in months to come, sources told Insurance Journal.

For homeowners: HB 1344 would follow many other states’ leads and set up a wind-mitigation grant program. Funded through premium taxes, the program would provide matching grants of $6,000 to be used for roofs and roof attachments, water barriers, and other retrofits. Currently, Georgia law calls for premium discounts for fortification efforts but provides no grant funding program.

The key question now is what the Senate may alter in the bill. “The issue to watch in the Senate will be if any changes are made that would harm the progress the Georgia insurance marketplace has seen in recent months,” Barbour noted.

If signed into law, the bill would take effect July 1. The full text of the House bill can be seen here.

A separate bill passed by the House, HB 1274, would require auto insurers to annually estimate underwriting profits. If profits exceed projections, the commissioner’s office would be able to require the carrier to issue refunds to policyholders.

Only a few other states, including Florida, have similar measures in place. Progressive Insurance last fall, for example, was required to regurgitate some $950 million in excess profits to customers in Florida.