Georgia drivers are paying an average of $2,469 annually for full coverage car insurance, which is more than the national average. For Georgians earning the statewide average salary of $52,264, that means spending 5.99% of your after-tax earnings on car insurance. Young drivers, individuals with poor credit, and residents of areas like Atlanta pay significantly more.
Fortunately for Georgians, the rising cost of auto insurance is solvable, and lawmakers need look no further than Florida for an example. A June Wall Street Journal editorial stated that the “culprit” for rising costs is a combination of inflation and lawsuit abuse. Put simply, the amount of costly litigation is increasing and driving up insurance costs, a reality that is pushing some insurers out of the Georgia market, leaving residents with fewer options and increasing prices.
Let’s unpack these factors, starting with inflation. Rising car insurance costs are significantly outpacing overall economic inflation. As of the latest Consumer Price Index summary, overall inflation had decreased 0.1% in June and stood at +3% for the year ending in June. Comparatively, inflation in the motor vehicle insurance index rose 0.9% in June and 19.5% over the year ending in June. Clearly, inflation is not entirely to blame for rising insurance costs.
Concerningly and in contrast, “lawsuit abuse” in Georgia is among the worst in the nation. In fact, the American Tort Reform Association (ATRA) dubbed Georgia the number one “judicial hellhole” in the country last year. Georgia won this unenviable title after an increase in “nuclear” verdicts (verdicts larger than $10 million), excessive and meritless lawsuits, and expanded premises liability.
Gov. Brian Kemp knows about these problems and how they hurt Georgia’s businesses and residents. He told the Georgia Chamber of Commerce last August, “The laws on our books make it too easy to bring frivolous lawsuits against Georgia business owners which drive up the price of insurance and stop new, good-paying jobs from ever coming to communities that need them the most.” At that time, Kemp asked the state legislature to prioritize tort reform in order to bring down the volume of excessive litigation, but the legislature’s progress on the issue last session was minimal. (Seatbeat gag rule, anyone?)
This is where Florida comes in. Although its insurance markets still aren’t perfect, they’ve gotten a lot better in the last few years. And why is that? Tort reform that has brought down the state’s volume of excessive, meritless litigation. Last year, Gov. Ron DeSantis signed HB 837 into law. The reforms encompassed by the legislation included eliminating attorney’s fee multipliers, standardizing the calculation of medical damages, and reducing the statute of limitations to two years for medical damages. “This legislation prevents frivolous lawsuits and allows good claims to move forward,” House Speaker Paul Renner said in a statement. “These reforms make our economy more competitive and Florida more affordable for our citizens and businesses.”
These reforms and others have already had concrete results, and experts expect that improvements will continue over the next few years. Florida had the second largest sum of nuclear verdicts in the country between 2009 and 2022, but in 2023, it dropped to seventh place. At least eight insurance companies filed rate decreases that will take effect this year, while ten other companies filed zero percent increases.
Florida’s insurance market is stabilizing, while Georgia’s will likely continue getting worse until our legislature steps up. It’s time for them to answer Kemp’s call for tort reform and follow in Florida’s footsteps: clamp down on the trial attorneys that are filing excessive lawsuits for exorbitant amounts of money, enriching themselves and making everything more expensive for everyday Georgians. It’s time for tort reform.