A comprehensive tort reform package moving through the Georgia General Assembly is essential to addressing the impacts of legal system abuse on the costs of insurance for consumers and businesses in the Peach State, according to Trends and Insights: Georgia Insurance Affordability, an Issues Brief published by the Insurance Information Institute (Triple-I.)
With below-average income and above-average insurance expenditures, Georgia has become one of the least affordable states for personal auto insurance, a recent study from the Insurance Research Council (IRC), noted. Moreover, analysts predict that insurance rates will play an increasing role in the affordability of homeownership in the state over the next few years.
Triple-I’s report noted that from the mid-2000s through 2014, Georgia residents spent about the same as other Americans on personal auto insurance. However, from 2014 to 2022, household expenditures for this product line in Georgia increased by 5.6% annually, compared with 3.3% in the U.S. overall – faster than in any other state.
By 2022, average personal auto expenditures were $1,347 in Georgia, about 20% higher than the U.S. average. Meanwhile, Georgia’s median household income for 2022 is approximately 9% lower than the U.S. average. The result is that Georgia ranked as the 47th least affordable state for personal auto insurance in 2022.
Soaring Litigation Impacts on Cost and Availability of Insurance in Georgia
Policyholders have a right to a fair and expedient claims process. However, outsized verdicts, drawn-out litigation, and out-of-control legal costs undermine the predictability required to determine fair rates and mitigate losses. Frivolous or unnecessary lawsuits further compound an insurer’s exposure. Legislative reform such as Georgia Gov. Brian Kemp’s tort reform package may help to stabilize insurance costs.
“There must be more work done to curb legal system abuse in Georgia, as insurers are seeing significant increases in claims costs when billboard attorneys enter into the picture,” said Sean Kevelighan, Triple-I CEO. ”Understanding how these trends drive up costs and identifying policy levers for tort reform legislation can ultimately bring positive outcomes for Georgia’s economy and its consumers and business owners.”
Triple-I recently launched an awareness campaign across Metro Atlanta addressing the impacts of legal system abuse in Georgia that include interstate billboards and digital scapes, as well as a consumer-focused website.
Rising Homeownership Costs
The report notes home prices have nearly doubled nationwide over the last decade and insurance rates could impact people’s ability to afford a home. Georgia ranks among the 10 states where this trend could take off, dampening home purchase rates within Georgia and compelling existing homeowners to depart for cheaper insurance states.
Residents spent 2.3% of their household income on homeowners insurance in 2021, garnering a ranking of the 42nd least affordable state for homeowners insurance, according to a study conducted by the IRC.
Impacts of Severe Weather Events
In the last five years (2019-2023), Georgia has experienced 38 weather disaster events, with losses exceeding $1 billion each. In 2023 alone, the state was affected by 14 separate billion-dollar-plus weather events.
“Much of these weather losses stemmed from severe storms and tornadoes, with costs driven by factors typically experienced in the aftermath of a regional disaster such as increased demand sparking inflation, supply-chain issues, and labor shortages involved in property repairs and replacement,” said Dale Porfilio, FCAS, MAAA, chief insurance officer of the Triple-I and president of the IRC.
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