Hedge funds, trial lawyers responsible for rising car insurance costs for Georgia drivers

Civil Lawsuits
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Georgia Attorney General Chris Carr | law.georgia.gov

Recent reports indicate that the participation of third-party financiers in the legal system is resulting in a significant number of lawsuits and escalating litigation costs. This trend is contributing to increased car insurance costs for policyholders in Georgia and raising national security concerns.

According to the Insurance Information Institute (III), plaintiff attorneys are employing tactics that lead to an increased number of lawsuits, higher litigation costs, and larger payouts. These practices are causing car insurance costs to rise, further straining consumers' economic situations. "There are real costs behind what we all know and see plaguing our roads with promises of settlement dollars, as billboard attorneys are racking up fees, and consumers are found to be getting less and less," said Sean Kevelighan, CEO of III. "The price of insurance is the effect, not the cause of risk, and there must be more work done to curb legal system abuse, as auto insurers – both personal and commercial – are seeing significant increases in claims costs when attorneys enter into the picture."

Bankrate's report reveals that residents of Georgia pay more than the national average for car insurance. In Georgia, the annual average cost of car insurance stands at $2,610 or 3.58% of the average income. Nationwide, last year saw a 26% increase in the average cost of full coverage auto insurance.

Georgia Attorney General Chris Carr has expressed concerns over third-party litigation funding (TPLF), a practice where external parties finance litigation, according to a press release. Carr conveyed these concerns to U.S. Attorney General Merrick Garland, cautioning that foreign adversaries could potentially fund lawsuits in the U.S., thereby gaining leverage over the economy and national security. "By funding lawsuits that target specific sectors or businesses, foreign adversaries could weaponize our courts to effectively undermine our nation’s interests," Carr stated.

A report from the National Association of Insurance Commissioners (NAIC) also indicates that TPLF is making insurance more expensive for consumers. Insurance providers are grappling with higher liability costs due to the surge in litigation. Consequently, insurers are compelled to increase costs for their policyholders.

The III's website states that over 50 insurance companies are members of the association. The III provides research reports, white papers, and other resources aimed at enhancing understanding of the insurance industry. It is affiliated with The Institutes Risk and Insurance Knowledge Group.