Governor Brian Kemp of Georgia reiterated his stance on limiting lawsuits during a news conference held on Thursday, arguing that such measures are essential to curbing the ever-increasing costs of insurance.
However, the situation surrounding these changes is more nuanced. While adjustments may lead to lower liability insurance expenses for businesses and commercial property owners, the evidence remains inconclusive when it comes to significant reductions in premiums for car insurance and other forms. Some experts suggest that initiatives aimed at limiting lawsuits, commonly referred to as tort reform, tend to boost profits for insurers rather than significantly lower policy costs.
Kemp has made this issue a focal point of his agenda for the year, proposing a review of liability rules concerning businesses and how they are held accountable for injuries that occur on their premises. Additionally, he seeks to ensure that individuals claim compensation only for their actual medical expenses and prevent attorneys from presenting irrelevant figures to juries to increase damage awards.
During his address, Kemp expressed that various sectors, including grocery stores, small businesses, hospitals, and childcare facilities, are urging for changes in tort laws in Georgia. He pointed out that many residents believe the rise in insurance rates stems from the increasing frequency of questionable lawsuits and the substantial damages awarded in jury trials.
To address these concerns, Kemp has suggested several reforms aimed at restructuring the litigation process. He wants jurors to be made aware of factors like whether a seatbelt was worn during an accident, as well as any third-party funding involved in lawsuits, a practice that has been adopted in other states.
However, there remains skepticism about whether excessive lawsuits and large jury awards are indeed contributing to elevated insurance costs. Kenneth Klein, a professor of law, has noted the lack of concrete data supporting the notion of a nationwide litigation crisis impacting insurance rates. “While it could be happening, we cannot confirm it,” he stated.
On the other hand, Mike Iverson from Oakbridge Insurance noted that insurance companies value predictability when it comes to determining rates, and some have begun withdrawing from specific types of coverage, leading to challenges for businesses seeking insurance.
High-profile cases have made headlines, such as when a jury awarded nearly $43 million to a victim following a shooting at a CVS in Atlanta, highlighting claims that the company should have bolstered security measures. In another instance, a Jonesboro mobile home park was ordered to pay $31 million after a fatal shooting on its property. Georgia’s Insurance Commissioner, John King, pointed out that business owners in neighborhoods categorized as high-crime areas frequently face difficulties due to insurers’ constraints.
Despite Kemp’s commitment to action, opponents caution that verdicts of such magnitude are rare and that insurance firms remain profitable. They argue for greater transparency in how insurance rates are established. Joanne Doroshow, executive director of the Center for Justice & Democracy, criticized the industry’s tendency to use isolated verdicts to justify rate increases or limit coverage.
Analyzing the effect of tort reform on insurance premiums in other states proves challenging due to the interplay of various factors and differing reform approaches. While some states have benefited from tort reform, research indicates that how much savings are passed on to consumers by insurance companies can vary widely.
One prevalent reform is the implementation of caps on noneconomic damages; however, Kemp’s proposals do not include these measures, as the Georgia Supreme Court ruled against caps in 2010, citing constitutional violations.
Insurance rates are also influenced by external factors such as inflation and extreme weather conditions. Typically, the insurance market experiences cycles, often resulting in fewer coverage options and rising rates during tougher years.
Reports indicate that Georgia insurers were less profitable in 2022 compared to several other states, although trends over time show nothing out of the ordinary in Georgia’s fluctuations. The report from Commissioner King highlights an uptick in both the number of claims and the amounts awarded, primarily in lawsuit cases. He also observed that increasing percentages of legal claims are resulting in maximum policy payouts.
Conversely, the Georgia Trial Lawyers Association contested King’s findings. Risk consultant David Stegall pointed out that the claim rates correlate with Georgia’s high accident statistics, while both claims and payouts have remained stable or even decreased when adjusted for inflation and population growth.
Despite Kemp’s assurances that his proposed changes would still ensure consumer accountability for businesses and medical professionals, critics maintain that such reforms could undermine protections for everyday citizens. “The idea that limiting consumer rights will lower insurance rates is not only misguided, but it’s simply untrue,” stated Rep. Tanya Miller, an Atlanta Democrat.
