Georgia’s Tort Reform: A Promise of Lower Insurance Costs?
ATLANTA – Rising insurance costs are a major concern for many Georgians, prompting lawmakers to consider a controversial tort reform bill. 11Alive News Investigates has examined the claims surrounding the bill, specifically whether it will actually translate into lower insurance premiums.
The Bill’s Potential Impacts
The proposed tort reform aims to reduce lawsuits and jury awards, but its impact on rising insurance premiums is hotly debated. Critics argue that the bill, which alters admissible evidence, medical bill presentation, and who can be sued, could harm individuals injured by others by limiting their right to sue. Proponents, however, claim the changes will encourage insurance companies to offer lower premiums.
Promises of Relief
The central promise of the bill is lower insurance premiums. Supporters also suggest the reforms may make it easier for businesses to secure insurance.
After reviewing reports, legislative hearings, and interviewing individuals close to the matter, it appears that the bill might help some businesses obtain insurance. However, there’s no guarantee of savings for consumers on their car or homeowner’s policies.
The Debate Over Lawsuits and Premiums
Georgians frequently see attorney commercials promising large payouts. The central question is whether lawsuits and large jury verdicts are the drivers of rising insurance premiums. The debate over these issues continues.
The Office of Commissioner of Insurance and Safety Fire was tasked with evaluating litigation within Georgia’s insurance industry. The office reported that more people are hiring attorneys after car crashes and that these clients tend to receive significantly higher payouts than those who don’t.
Supporters’ Perspective: Limiting Lawsuits
Supporters of tort reform believe limiting lawsuits and multi-million dollar jury awards will lead to lower insurance premiums. “We’re seeing a legal system that is being abused by trial lawyers who are making a lot of money off of this current system,” stated James Beal, Executive Director of Georgians for Lawsuit Reform.
Beal points to Florida as a success story.
Florida’s Example: A Shining Success?
Beal cites Florida’s experience as a positive example. “They are seeing very successful and dramatic results in their insurance markets…with a nearly 6 percent reduction in insurance premiums. They have 11 new carriers coming into the state writing policies,” he said.
According to a February news release, the savings vary by region and provider. However, Gov. Ron DeSantis’ office reported that 60% of insurance carriers have expanded business in the state, and 40% filed for a rate decrease.
Florida also passed consumer protection and insurance accountability measures, which Georgia’s bill does not address.
“If we can achieve just half of that result here in Georgia, I think everyone would be very pleased,” Beal said.
Even without direct premium reductions, proponents also argue that reforms will reduce what is referred to as the “tort tax.” The Perryman Group, using economists, estimates that Georgians pay approximately $1,372 per person in higher product prices, job losses, and reduced economic activity, due to costs associated with lawsuits.
“What tort reform means is improvements in our legal system,” Beal said. “We’re looking at those cost drivers in the legal system that impact businesses and Georgians all across the state. I think that if you ask any Georgian, they’re saying that the status quo is unacceptable.”
Skeptics’ Concerns: No Guarantee of Lower Rates
Joanne Doroshow, Executive Director of the Center for Justice and Democracy, disagrees. After decades of studying tort reform, she believes the data tells a different story. “Our research finds that rates never come down when you pass these kinds of laws,” Doroshow said.
Doroshow has studied states both with and without tort reform and found “basically no difference” in insurance rates. She attributes any rate changes in Florida to the natural volatility of the market. There is no standard definition for tort reform, and differences between states make comparisons difficult.
While Insurance Commissioner John King supports tort reform, he told lawmakers he couldn’t guarantee lower prices. He did state that the reforms would give him more leverage to push back or review companies’ data when they request higher premiums.
Doroshow notes that factors beyond lawsuits affect insurance rates, like profit cycles, climate events, community accident rates, and, in her opinion, weak regulations. Critics argue that the insurance industry’s own behavior leads to large penalties.
A 2020 Florida survey revealed that 78% of individuals who hired lawyers did so because they felt their insurance claims were delayed, denied, or unfairly undervalued.
According to Doroshow, Georgia’s insurance commissioner should request 10 years of closed-claims data to get the actual data on companies’ losses and if payouts were justified.
11Alive News Investigates asked the state if it had ever conducted such an analysis, and have received no response.
Beyond the Costs: The Broader Picture
There are considerations for and against tort reform that extend beyond costs. Insurance is essential for various activities. If the industry dislikes Georgia’s policies, it can choose not to do business in the state.
Therefore, supporters assert that these reforms, which they believe make trials more equitable, verdicts more consistent, and could potentially stop unnecessary lawsuits, are crucial for maintaining insurers and fostering competition. Conversely, critics argue for greater accountability in regulating the industry as a better approach.
A special committee has been established to address the issue.
