Insurance

Uninsured Motorist Stacking

Uninsured motorist (UM) insurance pays victims of car crashes for medical bills and property damage when the at-fault driver either has no insurance, or their insurance coverage is so low that it doesn’t fully cover the costs.

Georgia law limits how much of that coverage drivers can access in certain situations. If the at-fault driver has very little liability coverage, the victim’s UM coverage will not “stack” on top of the liability coverage. Thus, accident victims often must pay for medical bills and property damage out of their own pockets.

For example:

You have a $100,000 UM policy. One day, on your way to work, you are hit by a driver who ran through a stop sign. In addition to having your car totaled, you are seriously hurt and have large medical bills. The total value of your medical bills is about $125,000. The other driver only has $25,000 in liability insurance. Looking at the cost of the accident and the two policy limits, you calculate that the $25,000 in liability coverage plus your $100,000 in UM coverage will pay all of your bills. But under current Georgia law, the other driver's policy counts against, or eats into, your $100,000 UM coverage. Thus, your insurance company will tell you that the at-fault driver's liability insurance covered the first $25,000 of your policy, and they will only pay the remaining $75,000 on your $100,000 UM policy. You are left with $25,000 in unpaid medical bills that you must manage on your own.

Even worse, if you had purchased $25,000 in UM coverage, you would not be allowed to access a single penny, because the other driver’s liability insurance would have eaten into your entire UM policy.

In fact, in order for you (or any other driver) to get the full benefit of the UM policy that you’ve been paying for, you have to be hit by someone driving illegally with no insurance whatsoever.

“Stacking” UM insurance guarantees that Georgia drivers get what they pay for when they elect to add this coverage to their basic auto insurance policy. Proposed legislation would allow Georgia drivers to stack their UM coverage on top of the at-fault drivers liability insurance only when necessary to cover damage and injuries from an accident.

Many other states, including neighboring Alabama, have included a stacking provision in their insurance laws. Georgia could allow drivers to stack their UM coverage on top of the at-fault driver’s liability insurance when necessary to pay for injuries and property damage. This serves two meaningful purposes:

• Protects Georgia drivers and passengers who are hurt and/or suffer property damage through no fault of their own.
• Gives consumers what they expect when they elect to pay for UM coverage. Consumers often pay UM premiums for years without needing the coverage. Shouldn’t all of that coverage be available when the time comes to use it?

 

The insurance industry wins by raising rates, cutting coverage

The insurance industry can no longer blame rising premiums on "frivolous" or "jackpot" claims, according to new reports of record-shattering profits.

Industry analyst A.M. Best Co. confirms that property casualty insurance companies - including medical liability insurers and auto insurers - raked in a record $41 billion in earnings in 2004. P & C companies were "in the black" even before counting their earnings from investments in bonds and the stock market - for the first time since 1978.

This new profit data comes on the heels of yet another year of runaway earnings in 2003, when the industry posted a $29.88 billion profit - a 900% increase over 2002 earnings.

Even worse, A.M. Best Co. attributes this profit explosion to years of insurance companies raising rates on consumers, then cutting back on their coverage and benefits. You - the customer - are paying the price out of your own pocket.

Individuals and business owners have no choice but to pay higher premiums for less coverage because many lines of insurance - including medical liability insurance - is regulated under a loose system of review called "file-and-use." To learn more about an insurance reform that could save you money - called "prior approval" - click here!

The insurance industry has never been more profitable

The first few years of our new century brought hardship for American businesses and investors. After the September 11 terrorist attacks, the stock market slumped, the airline industry still hasn't recovered, thousands of Georgians lost their jobs, gave up expected pay raises, lost health insurance coverage, and fought for ways to keep their families' budgets on track.

But insurance companies have made a stunning comeback. The property casualty insurance industry posted a 900% increase in profits in 2003 over 2002, according to the industry's national association. In dollar figures, this record-breaking profit for the industry means that, nationally, insurers made $29 billion in 2003 - nearly 10 times the $3 billion profit they posted in 2002.

The property casualty insurance industry includes auto insurers and companies that sell malpractice insurance to health care providers, such as MAG Mutual.

But wait, there's more! Weiss Ratings Inc. - an independent research firm that rates the fiscal health insurance companies - reported this week that the nation's property casualty insurance companies reported profits of $28.1 billion in the first nine months of 2004 - a 22 percent increase over the same period in 2003.

Despite these huge gains, Georgia consumers have yet to see a drop in their premiums to match the high dollars that insurance executives are pocketing.

Georgia Watch has called for a full-accounting of insurance industry profits, and real reform that will hold insurers accountable to Georgia consumers.

Georgia's captive drivers are fish in a barrel

Auto insurers want bigger hooks

If you drive a vehicle, you already know that you can't travel Georgia's avenues and highways without auto insurance. State law forces Georgia drivers to buy auto insurance.

Yes, Georgia's law requiring people to buy auto insurance is a good one that protects us all from negligent drivers. But if you feel like you're on the menu at an insurance company dinner, it's because the state's requirement hands over millions of Georgia customers to auto insurance companies on a silver platter!

In 2005 , some Georgia lawmakers tried to take away the Georgia Insurance Commissioner's authority to regulate when and how auto insurers raise premiums - BEFORE rate increases hit your wallet. For over 15 years, this "prior approval" system has protected Georgia drivers from being overcharged by auto insurers, in a market that forces you to buy auto insurance.

This kind of market is called a "captive market" - one that holds customers captive to insurance companies that compete vigorously for your business. This is not your typical free market. If Georgia is going to create a captive demand market, it has long viewed it necessary to keep a closer eye on the insurance companies on the supply side.

But that's not what your insurance companies think. And why wouldn't auto insurance lobbyists want to weaken the Insurance Commissioner? Why not pressure lawmakers to allow insurers to jack up your premiums - with virtually no oversight? After all, weaker oversight of medical malpractice insurers has allowed those companies to saddle some of Georgia's health care providers with triple-digit percentage rate increases!

As with auto insurance, doctors are required to buy malpractice insurance to practice medicine in Georgia.

The prior approval system has kept auto insurance rates in check in recent years. Doctors, on the other hand, have paid the price for less scrutiny of malpractice insurance premium hikes by the Insurance Commissioner - doctors in some specialties saw their rates skyrocket 320 percent between 1996 and 2005.

Despite this dramatic growth in industry profits, consumers have yet to see significant savings in the premiums they pay insurers. The sky-high increases in malpractice premiums that Georgia doctors have shouldered for years is another good reason why we need to hold insurance companies accountable for the premiums they charge.

Tort "reform" didn't work in California, either

It shouldn't take a brain surgeon to figure out that insurance companies are the reason doctors' insurance rates have skyrocketed. Yet, doctor and hospital lobbying groups in Georgia have ignored the data about rising insurance rates and rising insurance industry profits.

Even worse, when insurance companies made empty promises to lower premiums if Georgia lawmakers passed "tort reforms," doctors jumped on board too.

Too bad they didn't look at the facts about California, the first state to pass "tort reform" in 1975.

Consider these numbers compiled by California's Foundation for Taxpayer and Consumer Rights:

• 450%: Percentage that California doctors' premiums rose in the 13 years after that state enacted a $250,000 cap on damages.
• 20%: Percentage that California's doctors' premiums declined in the three years after that state enacted Proposition 103 - a sweeping reform package that forces insurers to justify their rate increases under the scrutiny of consumers and the Insurance Commissioner.
• $1.2 Billion: Amount that insurers have refunded to doctors and other consumers since California voters enacted Proposition 103 in 1988.
• $891,000: Amount that the $250,000 cap in 1975 would be worth today.

And doctors are only one of many consumer groups that have benefited from California's model oversight of insurance companies.

• 25%: Percentage that California drivers saw their auto insurance premiums DECREASE between 1989 and 2000.
• 26%: Percentage that drivers in the rest of the country saw their auto insurance INCREASE during the same period.

The success of strong oversight of insurance companies preying on "captive markets" such as doctors and drivers is not limited to California.

In the State of Washington, doctors lobbied for years for barriers to justice for victims of medical negligence, including a "cap" on jury awards for injured patients and their families.

But "the state's doctors may have found a legitimate way to cut medical malpractice premiums: Get their malpractice insurance company to quit gouging them," writes Seattle Post Intelligencer columnist Thomas Shapely.

In March 2005, Washington's Insurance Commissioner announced that Physicians Insurance would have to refund more than $1.3 million plus interest in excess premiums charged in 2003.

The company chalked up the overcharges to a "paperwork error."

The Insurance Company Accountability Network (I-CAN)

The less you know about your rights as an insurance consumer, the more of your money insurance companies will get.

We can help you face your insurance companies on a level playing field.

Georgia Watch's Insurance Company Accountability Network, or I-CAN, provides indispensable tips, warnings and other step-by-step information on how to shop smart for policies, research what kind of coverage you need, and hold insurance companies to their part of the deal when you run into trouble and need to file a claim.

When dealing with insurance, even the bold print reads like fine print. I-CAN helps put the complex practices of insurance companies into everyday language - so consumers can stand up for their best interests when dealing with their insurers.

Credit Scoring

In debt, pay more

What do driving records, family health history and credit cards have in common?

Simple: how much you will pay for insurance.

Insurance companies use your credit score to calculate how to price your policy — or whether to cover you at all — even though it has nothing to do with what kind of risk your policy poses.

Credit scoring discriminates against any Georgian who has too little credit or less than perfect credit. It is an unfair method for setting rates because looking into your credit history says nothing about whether you are a safe driver or whether your home will be destroyed in a fire.

Tell us about your experiences with insurance companies in Georgia

Are you paying too much for insurance? Are you tired of getting the run-around from your insurance companies? DOWNLOAD OUR I-CAN ROAD MAP and learn how to steer clear of insurance pitfalls

Get a free I-CAN Road Map mailed to you! CLICK HERE

If you suspect you've been the target of unfair businesses practices of insurance companies — such as credit scoring — we'd like to know about it!

Through I-CAN, Georgia Watch is investigating patterns of abuse across the state and developing educational initiatives for consumers, to start eliminating abusive behavior by the insurance industry. I-CAN will give Georgians the tools to be better informed in the insurance marketplace and help them fight back when an insurance company does not treat them fairly.

Your personal stories make the most compelling cases for change. Please let us hear from you!