Georgia's Auto Insurance Affordability Crisis: A Deep Dive into the Factors and Solutions

Georgia's Auto Insurance Affordability Plummets

Georgia has seen a significant decline in the affordability of personal auto insurance over the past decade and a half, ranking 47th among all states in terms of affordability, according to a recent report by the Insurance Research Council (IRC). Only Louisiana, Florida, Mississippi, and New York are less affordable. In 2006, Georgia was the 27th most affordable state, but by 2022, personal auto insurance expenditures accounted for two percent of the median household income, compared with 1.5 percent nationally.

Escalating Costs and Key Findings

From the mid-2000s through 2014, Georgians spent about the same on auto insurance as other Americans. However, between 2014 and 2022, auto insurance spending in Georgia grew 5.6 percent annualized, compared with 3.3 percent in the country overall. In 2022, Georgia’s average expenditure of $1,347 was 20 percent higher than the U.S. average. Factors contributing to this rise include economic inflation, rising replacement costs, risky driving behavior, and legal system abuse, with Georgia experiencing higher rates of injury claims, underinsured motorists, and claim litigation.

Litigation and Affordability Issues

Auto insurance litigation is a growing concern in Georgia, with elevated attorney advertising rates, particularly in television advertising. The presence of uninsured and underinsured motorists exacerbates affordability issues, as drivers are forced to purchase uninsured motorist (UM) and underinsured motorist (UIM) protection, further increasing average insurance expenditures. Georgia’s UIM rate has been increasing steadily and was the third-highest rate in the country in 2022.

To address these issues, it is recommended that Georgia consider implementing stricter enforcement of insurance mandates, promoting safe driving initiatives, and exploring tort reform to reduce litigation costs. Additionally, increasing public awareness about the importance of maintaining adequate insurance coverage can help mitigate the impact of uninsured and underinsured motorists.