When it comes to the cost of car insurance, Georgia is right smack in the middle of the pack, according to the consumer research firm ValuePenguin. We rank 26th in average annual rate, at $1,331.
That’s the good news, such as it is. In fact, it’s about as close to good news on this topic as Georgia drivers are likely to hear for a while, if ValuePenguin’s numbers are right. Because the trend lines are troubling, and in ways measured in more than just money.
As reported in the Atlanta Journal-Constitution, automobile insurance rates in Georgia have risen by a stunning 54 percent since 2011, the biggest such hike in the U.S. One insurer, Nationwide, more than doubled its premiums; Liberty Mutual’s increased by 82 percent. American Family, Farmers, GEICO, Allstate, Progressive and State Farm all raised premiums by more than 50 percent over that period, during which median incomes in the state grew by a modest 12 percent.
Obviously, there’s a problem.
Insurers point to a startling increase in traffic accidents, injuries and fatalities; the AJC cites federal Transportation Department reports putting the rise in fatalities over the last few years at somewhere between 7 and 10 percent.
Not surprisingly, a lot of that wreckage and carnage is attributed to distracted driving, which continues to be a deadly highway hazard. The biggest increases in accident rates are in states that have big urban areas with traffic congestion problems — like Georgia.
There’s also something called a combined loss ratio — the insurer’s cost of claims paid as a percentage of revenues. Georgia’s loss ratio, according to the ValuePenguin report, was 87 percent, a figure exceeded only by Colorado (89), Louisiana (89) and Michigan, whose 114 percent means the cost of insured driving in that state is very likely about to soar as well.
In Georgia, there’s a political as well as a statistical factor. The Journal-Constitution notes that a state law passed in 2008 allows insurers to raise rates without prior approval. The state can deny a rate increase, Insurance Commissioner Ralph Hudgens told the newspaper, only if the hike is “unreasonably high” and “a reasonable degree of competition does not exist.”
It is safe to infer that the 25 percent hike requested last year by Allstate, for instance, is not considered “unreasonably high”; and with more than 200 insurance companies doing business in Georgia, there’s certainly no lack of competition. (Or, quite obviously, of political lobbying clout.)
It's clear there’s little or nothing the Insurance Commission can do about the cost of legal driving in Georgia, and apparently little or nothing the General Assembly wants to do about it. It was, after all, the legislature that gave the green light to implicitly pre-approved rate hikes nine years ago.
If nothing else, the soaring price of state-mandated auto liability insurance should be a powerful incentive for Georgians to drive carefully. Which they should be doing anyway.