A tort reform package advancing in the Georgia General Assembly is being positioned as a measure to address rising insurance costs for consumers and businesses, according to a report by the Insurance Information Institute (Triple-I).
The report highlights the financial strain legal system abuse places on insurance affordability in the state.
Georgia ranks among the least affordable states for personal auto insurance, according to a study by the Insurance Research Council (IRC). The study found that the state’s below-average income and above-average insurance expenditures have made coverage costs a growing concern. Analysts also predict that rising insurance rates will increasingly impact homeownership affordability in the coming years.
Triple-I’s report points to a shift in auto insurance expenditures in Georgia since 2014. From the mid-2000s through 2014, residents spent about the same on personal auto insurance as other Americans. However, from 2014 to 2022, household expenditures for auto coverage in Georgia increased by 5.6% annually, compared to a 3.3% annual increase nationwide.
By 2022, the average annual personal auto insurance expenditure in Georgia reached $1,347, about 20% higher than the US average. Meanwhile, Georgia’s median household income was about 9% lower than the national median, ranking the state 47th in personal auto insurance affordability.
The tort reform package was unveiled by Gov. Brian Kemp, with the aim of bringing more transparency to third-party litigation funding and addressing several key issues within the state’s legal system.
The legislative package also focuses on several key provisions, including the reinstatement of standards for negligent security liability. Under these standards, businesses would only be held accountable for factors they can directly control.
Legal disputes and prolonged litigation have contributed to higher insurance costs in Georgia. Triple-I reported that excessive verdicts and extended legal proceedings add unpredictability to the insurance market, increasing claims costs and influencing rate-setting decisions.
The report notes that legislative measures, such as Kemp’s tort reform package, could help stabilize insurance expenses by addressing these factors.
As part of an effort to raise awareness of legal system abuse, Triple-I recently launched a public campaign across Metro Atlanta. The campaign includes billboards, digital displays, and an informational website for consumers.
Triple-I’s report also examined the effects of rising home prices on insurance affordability. Home values have nearly doubled nationwide over the last decade, and insurance costs could influence the ability of Georgia residents to purchase homes.
The state ranks among the top 10 where this trend may limit homeownership and lead some homeowners to seek more affordable insurance options elsewhere.
In 2021, Georgia residents spent 2.3% of their household income on homeowners insurance, ranking the state 42nd in affordability for this coverage, according to IRC data.
Weather-related disasters have further impacted the insurance market in Georgia. Over the past five years, the state has experienced 38 weather events with losses exceeding $1 billion each. In 2023 alone, 14 separate billion-dollar disasters affected Georgia.
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