Both houses of the Georgia General Assembly overwhelmingly passed Senate Bill 276, a bill that brings needed changes to auto insurance laws in our state.

First, the bill provides additional coverage to drivers who are hit by motorists with low levels of insurance, or none at all. Second, by removing an unnecessary layer of government bureaucracy and control, this legislation allows auto insurance rates to be determined by the marketplace instead of requiring "prior approval" from state regulators.

These are good measures for Georgia motorists.

Some opposed to a free-market approach are using scare tactics that motorists will be at the mercy of the insurers and rates will go sky-high. Such hyperbole is not in sync with the reality of a competitive free market or the experience of roughly 25 other states with this system in place. A recent multistate study on automobile-insurance deregulation conducted by professors at Georgia State University confirms that less regulation does not translate into higher prices. Competition controls costs; it does not drive them up.

In a free-enterprise economy like ours, consumers are the best watchdog. Companies that can't compete on price, product or value soon find themselves without customers. Competition keeps prices in check and gives consumers choices and innovative products. SB 276 applies this logic to auto insurance —- giving consumers the credit they're due for being savvy shoppers.

Insurance companies are also well aware that they put their business at risk with rate increases, so they typically proceed with caution anytime they believe an increase is necessary. Insurers know that consumers are rate-sensitive and a customer lost to a competitor is not easily won back. Insurers in Georgia are not about to act capriciously and spike rates, because they have too much to lose if they did.

Periodically, insurance companies, like any business, need to make adjustments —- up for some drivers, down for others. Some people opposed to the bill cited several pending requests to increase rates for selected individuals based on their driving records. Such increases would fairly match risk and protect drivers with good records from subsidizing those with bad records. Critics failed to mention that the overall effect of these requests was to decrease rates for the majority of policyholders.

There's no evidence in the states that have a competitive system in place that there are more requests for increases —- or for larger increases. On the contrary, more often the rates are lower.

Georgia's well-known consumer advocate Clark Howard summed up the ideal balance between state oversight and market pricing when discussing the positive results of competitive rating laws passed in New Jersey. He commented that the state should play a role in making sure that (auto) insurers live up to their commitments and assist people if they have claim problems, but in terms of pricing, that's where the marketplace should reign supreme.

Executive director of the Atlanta consumer group Georgia Watch, Allison Wall, said recently that consumers will have more choices with this legislation and can easily shop around for a new carrier if rates go up unexpectedly. The Internet gives consumers access to more choices and information about buying auto insurance than ever before. With hundreds of auto insurers in our state competing for the customer's dollar, Georgians have the best consumer protection possible.

The insurance commissioner must still approve rates for minimum mandatory liability coverage and has the added ability to strike down any rate change for coverage beyond the minimum that is not appropriate. Changing the rating law simply gives companies the ability to make adjustments without the red tape.

Competition is the backbone of our free-enterprise system.

This bill awaiting Gov. Sonny Perdue's signature allows insurance companies to compete vigorously and swiftly on price and offer the innovative products that consumers want. SB 276 is a free-enterprise bill that's good for Georgia consumers.

> State Sen. Cecil Staton is a Republican from Macon and one of the sponsors of Senate Bill 276.