George C. Creal, Jr. P.C.

Call Now For A Case Evaluation

(770) 961-5511

George C. Creal, Jr. P.C.

Understanding The Rise In Auto Insurance Rates In Georgia And The Impact Of Govenor Kemp’s Proposed Tort Reform

  • By: George C. Creal

Understanding The Rise In Auto Insurance Rates In Georgia And The Impact Of Govenor Kemp's Proposed Tort ReformGeorgia drivers are facing a noticeable increase in their auto insurance rates, and understanding why is more crucial than ever. Average automobile insurance in Georgia has increased by over 21% from 2023 to 2024. As a Personal Injury Attorney, I delve into the reasons behind this surge and examine why the proposed tort reform might not be the silver bullet it’s promised to be. Consumers won’t benefit. This is just a give-away of rights and welfare for the insurance industry.

The Surge In Insurance Rates

1. Inflation And Repair Costs:

Inflation has hit the auto repair industry hard. The costs of parts and labor have escalated due to supply chain disruptions and price increases in raw materials. However, there’s an additional layer with Electric Vehicles (EVs). EVs, which are becoming more common on Georgia roads, have higher repair costs due to their complex battery systems and electronics. Electric vehicles are now 24% more expensive to repair than comparable gas powered vehicles. Additionally, newer vehicle models are equipted with expensive computers and sensors that have to be replaced after accidents to facilitate things like auto-pilot, full-self driving, lane keeping and automatic emergency braking. This has directly impacted insurance premiums as companies adjust to cover these higher claim costs. The silver lining is that full self driving is just over the horizon at 5 to 10 years out and automobile insurance may disappear or be drastically lowered in that time-frame.

2. Frequency And Severity Of Claims:

The increase in both the number and severity of claims in Georgia is notable. Population growth without corresponding infrastructure improvements including pot holes and congested roadways has led to more automobile collisions. Moreover, the unique damage patterns of EVs in accidents—often requiring more specialized and expensive repairs—further contribute to this trend.

3. Natural Disasters And Climate Change:

Georgia has seen an uptick in severe weather events, increasingly linked to climate change. Hurricanes, hail, wind, fires, heavy storms, and flooding have not only caused more claims but have also increased the types of damages vehicles sustain. The repair or replacement of vehicles damaged by such weather events adds significant cost to insurance payouts, hence raising premiums.

4. Litigation Trends:

While litigation is often highlighted in discussions about rising rates, its direct impact is complex. Claims have indeed increased, but this doesn’t singularly account for the rise in premiums. Remember, Correlation does not mean causation.

5. When Insurance Company “Float” Investments Go Down, Rates Go Up.

From an insurance company’s perspective, the correlation between bond and stock market performance and tort reform legislative proposals is quite significant, primarily because of how insurers manage their “float”—the money collected from premiums before it’s paid out in claims.

Warren Buffett’s 2009 letter mentioned that Berkshire Hathaway was “paid $2.8 billion to hold our float in 2008.” This illustrates how substantial the income from insurance company float can be for well-managed insurers. Over time, Berkshire’s float grew from $20 million in 1967 to $49 billion by 2005, with the float generating significant investment income under Buffett’s stewardship. For instance, in 2020, investment income was highlighted as the second largest source of revenue for several major insurance companies.

In recent times, Insurance Companies have faced a challenging environment where their investment portfolios, primarily composed of bonds and stocks, have underperformed. This downturn in market performance has led insurers to explore various strategies to bolster their financial health, with one prominent approach being the advocacy for tort reform in States like Georgia.

The last most significant reform legislation to make it through the General Assembly came way back in 2005, a bill that imposed a $350,000 cap on non-economic damage awards in liability lawsuits. Now in 2025, there is a new tort reform push. What do these legislative proposals have in common? They both coincide with bond values at historical bottoms.

The Proposed Tort Reform And Its Limitations

Governor Brian Kemp’s push for tort reform aims at reducing insurance rates by limiting lawsuits. Here’s why this might not be the comprehensive solution we need:

1. Evidence Of Effectiveness:

Tort reform’s impact on insurance rates is not conclusively positive. In states where similar reforms were enacted, there wasn’t a consistent drop in premiums, suggesting that other factors are more influential in rate determination.

2. Profit Over Policyholders:

The benefits of tort reform might primarily go to insurance companies, boosting their profitability without necessarily passing savings onto consumers. This doesn’t tackle the underlying reasons for rate increases.

3. Consumer Rights:

Limiting lawsuits could restrict Georgians’ ability to seek adequate compensation for injuries due to negligence, impacting access to justice, especially for those with significant injuries where full damages might not be covered under new laws. This pushes injury victims into government programs like social security disability insurance. So insurance profit ends up being covered by taxpayers.

4. Complexity Of Insurance Pricing:

Insurance pricing involves numerous variables beyond litigation. The high repair costs of EVs and damages from climate change-induced severe weather are pivotal yet often overlooked in discussions about tort reform.

Conclusion

Tort reform alone doesn’t address the multifaceted reasons behind rising insurance rates. Here’s what a more effective strategy might look like:

  • Investing in infrastructure to mitigate accident rates.
  • Encouraging safer driving technologies and behaviors, especially for managing the unique challenges of EVs.
  • Adapting to climate change by preparing for and mitigating against severe weather impacts on vehicles.
  • Regulating insurance rate increases to ensure they’re justified by actual risk and cost increases, not just profit motives.

As we navigate these changes, understanding these complexities is vital for both policyholders and those seeking justice after an injury. My commitment is to advocate for solutions that look at the bigger picture, ensuring fairness and safety on Georgia’s roads.

Stay informed and stay safe. For more insights or legal assistance, don’t hesitate to contact our office.

George C. Creal

George Creal is a trial lawyer who has been practicing law
in the Metro-Atlanta area for over 27 years. George brings
a broad range of experience to the courtroom. Read More