Georgia has experienced a significant decline in the affordability of personal auto insurance over the past decade and a half, according to a recent report from the Insurance Research Council (IRC).
The report, titled “Personal Auto Insurance Affordability in Georgia,” highlights the state's increasing insurance expenditures relative to median household income.
In 2022, personal auto insurance expenditures in Georgia accounted for 2% of the median household income, compared to 1.5% nationally. This placed Georgia 47th in the nation for auto insurance affordability, with only Louisiana, Florida, Mississippi, and New York ranking lower.
The state’s position has deteriorated significantly since 2006, when Georgia was the 27th most affordable state.
The report indicates that from the mid-2000s through 2014, Georgians spent roughly the same amount on auto insurance as the national average. However, beginning in the mid-2010s, auto insurance expenditures in Georgia began to rise more rapidly.
Between 2014 and 2022, spending on auto insurance in the state grew at an annualized rate of 5.6%, compared to 3.3% nationally, and faster than in any other state. In 2022, the average expenditure in Georgia was $1,347, which was 20% higher than the US average.
Affordability challenges in Georgia’s auto insurance market are linked to several factors, including economic inflation, high replacement costs, poor driving behavior, and legal system abuse.
The report notes that Georgia experiences higher levels of certain cost drivers, such as the propensity to file injury claims after an accident, the prevalence of underinsured motorists, and the frequency of claim litigation.
Litigation related to auto insurance claims has become a growing concern in Georgia, with the report suggesting that tort reform in neighboring states may be pushing legal firms to seek opportunities in Georgia, contributing to elevated attorney advertising rates, particularly on television.
Dale Porfilio, president of the IRC and chief insurance officer at the Insurance Information Institute (Triple-I), commented on the impact of uninsured and underinsured motorists on affordability.
He noted that as affordability deteriorates due to rising costs or slower income growth, more motorists may choose to lower their policy limits or forgo mandated insurance entirely. This trend increases the need for drivers to purchase uninsured (UM) and underinsured motorist (UIM) protection, which further raises average insurance expenditures.
Porfilio highlighted that both UM and UIM rates are higher than the national average in Georgia, with the state’s UIM rate being particularly elevated. In 2022, Georgia had the third-highest UIM rate in the country, and this rate has been steadily increasing over time.
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