New Laws of Interest to Insurance Agents

July 1 is the date on which any law passed by the General Assembly earlier that year will take effect unless a different effective date is specified in the law itself.  This year, July 1 will bring two changes in Georgia’s insurance laws that should be of particular interest to insurance agents and agencies.

The first such change was the subject of an earlier post.  It concerns what are known as Stated Value, or Valued, Policies.  They are policies that provide coverage for certain residential buildings in a specified amount, which amount will be paid upon the complete destruction of the building without any proof by the insured that the building was actually worth the policy amount.  As noted in my earlier post, before July 1, 2016, such policies could only be issued to “a natural person or persons.”  Beginning on that date, such policies can be issued to ”any legal entity wholly owned by a natural person or persons.” Buildings or other structures that are residences for one or two families and that are owned by a legal entity that is in turn wholly owned by one or more individuals can be covered by a Stated Value policy.  Please see my earlier post for some potential traps for the unwary agent that such a policy presents.

The other, probably more significant, change that will occur on July 1 is a change in the anti-rebate law.  Up to now, it has been unclear whether an agent or agency could make gifts having a monetary value to their customers or potential customers as a way of thanking a customer for their business or encouraging a potential customer to get a quote or other information from the agent or agency.  Beginning on July 1, the making of such gifts “not exceeding $100.00 in value per customer in the aggregate in any one calendar year” will be permitted, as long as a customer or potential customer does not have to buy or renew an insurance policy to get the gift.  The type of gifts that can be made are limited to “prizes, goods, wares, store gift cards, gift certificates, sporting event tickets, or merchandise.”

Store gift cards and gift certificates are subject to the requirements of Georgia’s Fair Business Practices Act of 1975.  That Act requires that a gift certificate or store gift card be limited to use at a single merchant or group of merchants that share the same “name, mark, or logo” and that it be issued in a specified amount that cannot be increased, in the case of a gift certificate, but may be increased, in the case of a store gift card.

The change made to the anti-rebate law, O.C.G.A. Section 33-6-4, was also made to the law governing the rates that can be charged by insurance companies, O.C.G.A. Section 33-9-36, because that change also allows insurance companies to make the permitted gifts to their customers or potential customers.   It is my understanding that a large insurance company with a captive agency force was involved in the effort to get this change made.  That likely means agents and agencies who are competitors with such companies better be ready to take advantage of this change in the law, because those companies will be doing so.

For those who are interested in the other changes made to Georgia’s insurance laws by this year’s General Assembly, click here for the IIAG’s Capital Report, which summarizes all the changes made.