GA Code § 33-9-4 (2021)
2021 Georgia Code|Title 33 - Insurance|Chapter 9 - Regulation of Rates, Underwriting Rules, and Related Organizations|§ 33-9-4. Standards Applicable to Making and Use of Rates

 The following standards shall apply to the making and use of rates pertaining to all classes of insurance to which this chapter is applicable:    Rates shall not be excessive or inadequate, as defined in this Code section, nor shall they be unfairly discriminatory;   No rate shall be held to be excessive unless such rate is unreasonably high for the insurance provided and a reasonable degree of competition does not exist in the area with respect to the classification to which such rate is applicable; provided, however, with respect to rate filings involving an increase in rates, no rate for personal private passenger motor vehicle insurance shall be held to be excessive unless such rate is unreasonably high for the insurance provided and a reasonable degree of competition does not exist;   No rate shall be held inadequate unless it is unreasonably low for the insurance provided and continued use of it would endanger solvency of the insurer, or unless the use of such rate by the insurer using such rate has, or will, if continued, tend to destroy competition or create a monopoly;   Consideration shall be given to the extent applicable to past and prospective loss experience within and outside this state, to conflagration and catastrophe hazards, to a reasonable margin for underwriting profit and contingencies, to past and prospective expenses both country wide and those specially applicable to this state, to the insurer's average yield from investment income, and to all other factors, including judgment factors, deemed relevant within and outside this state; and, in the case of fire insurance rates, consideration may be given to the experience of the fire insurance business during the most recent five-year period;   Consideration may also be given, in the making and use of rates, to dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers;   The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the operating methods of any such insurer or group with respect to any kind of insurance or with respect to any subdivision or combination thereof;   Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any difference among risks that have a probable effect upon losses or expenses. Classifications or modifications of classifications of risks may be established based upon size, expense, management, individual experience, location or dispersion of hazard, or any other reasonable considerations. Such classifications and modifications shall apply to all risks under the same or substantially the same circumstances or conditions; provided, however, the Commissioner shall establish the maximum amount of any such modification;   Nothing contained in this Code section or elsewhere in this chapter shall be construed to repeal or modify Chapter 6 of this title, relating to unfair trade practices, and any rate, rating classification, rating plan or schedule, or variation thereof established in violation of Chapter 6 of this title shall, in addition to the consequences stated in Chapter 6 of this title or elsewhere, be deemed violative of this Code section;   No insurer shall base any standard or rating plan on vehicle insurance, in whole or in part, directly or indirectly, upon race, creed, or ethnic extraction; and   No insurer shall base any standard or rating plan on vehicle insurance, in whole or in part, directly or indirectly, upon any physical disability of an insured unless the disability directly impairs the ability of the insured to drive a motor vehicle.    (Code 1933, § 56-507, enacted by Ga. L. 1967, p. 684, § 1; Ga. L. 1978, p. 1423, § 1; Ga. L. 1978, p. 1936, § 1; Ga. L. 1980, p. 1011, § 2; Ga. L. 1982, p. 3, § 33; Ga. L. 1987, p. 911, § 1; Ga. L. 1988, p. 13, § 33; Ga. L. 1991, p. 1608, § 1.5; Ga. L. 1995, p. 1302, § 13; Ga. L. 2008, p. 1192, § 3/SB 276.)   Code Commission notes.   - Pursuant to Code Section 28-9-5, in 1987, "country wide" was substituted for "country-wide" in paragraph (4).   Editor's notes.   - Ga. L. 1991, p. 1608, § 3.2, effective April 17, 1991, not codified by the General Assembly, provides: "(a) Each insurer shall file its proposed forms, manuals, underwriting rules, rates, and rating plans for coverages under motor vehicle insurance policies to be issued, issued for delivery, delivered, or renewed on and after October 1, 1991, with the Commissioner of Insurance for such examination and approval as is required by law. The Commissioner shall not approve such filings unless such filings contain optional medical payments coverage. Rates and rating plans for motor vehicle insurance coverages filed pursuant to this subsection shall reflect a reduction of the rates or rating plans for such coverages on file with the Commissioner as of January 28, 1991, of not less than 15 percent, as compared to rates in effect for coverages required to be offered by the former 'Georgia Motor Vehicle Accident Reparations Act,' with the exception of physical damage coverages, as specified in paragraph (3) of subsection (a) of former Code Section 33-34-5 and third-party property damage coverages. On October 1, 1991, the Commissioner shall reduce by 15 percent or such higher amount as he determines appropriate, after notice and hearing as required by law, any rate or rating plan for such coverages under motor vehicle insurance policies for which no filing has been received.   "(b) Any insurer aggrieved by the rate filing required pursuant to subsection (a) of this section may petition the Commissioner for a hearing to grant relief from the rate filing as the result of extraordinary circumstances. The insurer shall have the burden of proof to establish the extraordinary circumstances which justify relief. A hearing conducted pursuant to this subsection shall be conducted in accordance with the provisions of Chapter 2 of Title 33. Upon conclusion of any hearing conducted pursuant to this subsection, the Commissioner shall enter an order specifying the rates to be used by the insurer and shall indicate in his order all factors entering into a decision to relieve the insurer from full compliance with the provisions of subsection (a) of this section."   JUDICIAL DECISIONS    It makes no difference what process or method an insurance company follows in reaching its rate structure unless it violates the law in the particulars provided in this chapter. Allstate Ins. Co. v. Bentley, 122 Ga. App. 738, 178 S.E.2d 700 (1970), modified, 227 Ga. 708, 182 S.E.2d 770 (1971).   Violation of any one standard makes rate illegal.    - A failure to comply with any one of the three criteria of paragraphs (1) through (3) of this section in the making of a rate causes the rate to be illegal and offensive to this chapter. Allstate Ins. Co. v. Bentley, 122 Ga. App. 738, 178 S.E.2d 700 (1970), modified, 227 Ga. 708, 182 S.E.2d 770 (1971).   Violation justifies Commissioner's prohibiting order.    - Paragraphs (1) through (8) of this section list different standards, for violation of any one of which the Commissioner may prohibit use of rates. Caldwell v. Insurance Co. of N. Am., 235 Ga. 141, 218 S.E.2d 754 (1975).   Each standard must be met.    - The three statutory criteria of paragraphs (1) through (3) of this section must each be met in order for a challenged rate to withstand a possible prohibiting order of the Commissioner. Allstate Ins. Co. v. Bentley, 122 Ga. App. 738, 178 S.E.2d 700 (1970), modified, 227 Ga. 708, 182 S.E.2d 770 (1971).   Purpose of paragraph (2).    - The "reasonable degree of competition" provision in paragraph (2) of this section is intended to promote the establishment of premium rates at a reasonable level. Bentley v. Allstate Ins. Co., 227 Ga. 708, 182 S.E.2d 770 (1971).   Paragraph (2) relates to industry-wide competition.    - The provision of paragraph (2) of this section prohibiting the Insurance Commissioner from disapproving a rate as excessive when a reasonable degree of competition exists is directed to the sufficiency of the competition to keep rates at a fair level. The question is not whether a particular insurer is competing nor whether there is some competition in the area, but whether the competition in the industry is vigorous enough to assure that rates are not excessive. Bentley v. Allstate Ins. Co., 227 Ga. 708, 182 S.E.2d 770 (1971).   Requires rate to be measured against other companies collectively.    - To authorize the Commissioner's conclusion of law that an insurer's rates are excessive because a reasonable degree of competition does not exist in the area with respect to the classification to which the rates are applicable, the evidence must substantially support the principle that the insurer is not reasonably competitive with other companies collectively. Allstate Ins. Co. v. Bentley, 122 Ga. App. 738, 178 S.E.2d 700 (1970), modified, 227 Ga. 708, 182 S.E.2d 770 (1971).   Rates may be held unreasonably high under paragraph (2) without finding no reasonable competition.    - Under paragraph (2) of this section, it is not necessary to first find that a reasonable degree of competition does not exist before a rate may be considered to be excessive because it is unreasonably high for the insurance provided. Allstate Ins. Co. v. Bentley, 122 Ga. App. 738, 178 S.E.2d 700 (1970), modified, 227 Ga. 708, 182 S.E.2d 770 (1971).   Rate may be excessive although less than rates of majority of companies.    - The fact that a particular insurance company's rate may be less than the rate for the majority of the companies does not require a conclusion that the rate is not excessive. Bentley v. Allstate Ins. Co., 227 Ga. 708, 182 S.E.2d 770 (1971).   Paragraph (4) requires consideration of entire industry's experience.    - The language of paragraph (4) of this section means the experiences of no one company but the combined experience of the entire industry shall be considered. Allstate Ins. Co. v. Bentley, 122 Ga. App. 738, 178 S.E.2d 700 (1970), modified, 227 Ga. 708, 182 S.E.2d 770 (1971).    Merely considering data before rejecting its import will not satisfy paragraph (4) of this section when it is plain that the factors being considered are quite significant, are generally recognized as such, may be expected to continue over a long period, and are capable of being figured in some manner into prospective loss experience. Caldwell v. Insurance Co. v. N. Am., 235 Ga. 141, 218 S.E.2d 754 (1975).    This section authorizes classifications of risks based upon a reduced expense factor. Caldwell v. Standard Nat'l Ins. Co., 229 Ga. 777, 194 S.E.2d 456 (1972).    The burden of proof is on the insurance company to show that its new rates are not subject to the criticism charged by the Commissioner and thus not offensive to the statute. Allstate Ins. Co. v. Bentley, 122 Ga. App. 738, 178 S.E.2d 700 (1970), modified, 227 Ga. 708, 182 S.E.2d 770 (1971).   OPINIONS OF THE ATTORNEY GENERAL   Offer of group rate valid when offered under statutory standards.    - A filing which purports to offer insurance rates on a group basis does not violate O.C.G.A. § 33-6-5(4) when the rates are derived on the basis of rate-making considerations and standards set forth in O.C.G.A. § 33-9-4. 1984 Op. Att'y Gen. No. 84-88.    Loss experience, expense factors, and income investment factors are legitimate rate-making considerations under O.C.G.A. § 33-9-4. 1984 Op. Att'y Gen. No. 84-88.   RESEARCH REFERENCES   Am. Jur. 2d.   - 43 Am. Jur. 2d, Insurance, § 38 et seq.   C.J.S.   - 44 C.J.S., Insurance, § 103 et seq.   ALR.    - Dividends on policies as violation of statutory prohibition of rebate, remission, refund, or other discrimination in respect to premiums, 137 A.L.R. 1029.   Recovery of damages as remedy for wrongful discrimination under state or local civil rights provisions, 85 A.L.R.3d 351.   Liability insurance: intoxication or other mental incapacity avoiding application of clause in liability policy specifically exempting coverage of injury or damage caused intentionally by or at direction of insured, 33 A.L.R.4th 983.