Mass tort litigation contributes to skyrocketing auto insurance costs

Civil Lawsuits
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Gov. Brian Kemp meeting with the Independent Insurance Agents of Georgia | X/IIAGeorgia

The most recent Consumer Price Index (CPI) summary released by the U.S. Bureau of Labor Statistics (BLS) indicates that auto insurance costs rose by 1.4% in January. This increase brings the total rate of inflation for auto insurance to 20.6% over the 12-month period ending in January. Reports from Georgia suggest that mass tort litigation is a significant factor contributing to these escalating insurance costs.

Auto insurance experienced one of the highest 12-month rates of inflation among indexes reported in the CPI. The summary highlighted motor vehicle insurance as one of the "indexes with notable increases over the last year", alongside shelter (+6%), recreation (+2.8%), and personal care (+5.3%). The overall rate of inflation for the 12-month period ending in January was recorded at 3.1%.

According to a report from the Independent Insurance Agents of Georgia (IIAG), Georgia's insurance market is "worse than the national average". This situation is largely due to several multi-billion-dollar claim settlements where insurance providers were defendants. The IIAG report stated that trial attorneys are attempting to "maximize" their claims through strategies such as receiving funding from undisclosed third parties, resulting in higher costs for Georgian consumers' insurance coverage.

The IIAG also revealed that some insurance providers are either exiting Georgia or limiting their coverage within the state, leaving residents with fewer options. The remaining options typically offer less coverage at higher rates. "Nuclear verdicts come with a cost to all Georgians and that cost is rate increases for Georgia consumers," stated the report.

Established in 1897, IIAG serves as a trade association for independent agents, according to its official website. The organization strives to advance the independent insurance agency industry and provide resources and opportunities for its members, which currently number more than 4,000, with 100 partners.

The BLS, a part of the Department of Labor as per its website, provides data related to labor economics. The Bureau analyzes and publishes this data for use by government agencies, employers, and the general public.