Quick answer
Georgia leaders argue tort reform is needed because excessive and frivolous lawsuits are driving up insurance costs for small businesses. Cited figures include a $1,213.80 annual tort tax per resident, about 123,900 jobs lost each year, and requested rate increases averaging 25 percent, with insurers walking away from the state.
Georgia is facing a challenging litigation environment that harms small businesses by encouraging costly and frivolous lawsuits, driving up insurance premiums, and causing insurers to leave the state. Governor Brian Kemp and state leaders are advocating for tort reform to create a fairer legal system, reduce excessive legal costs, and protect Georgia’s economy and jobs.
Key Takeaways:
- Excessive lawsuits and biased court decisions have led to soaring insurance rates and a $1,213.80 annual ‘tort tax’ per Georgia resident.
- Legal system abuse results in the loss of approximately 123,900 jobs in Georgia each year, impacting the state’s economy significantly.
- Insurance companies are requesting average rate increases of 25% and are withdrawing from Georgia markets due to the current litigation climate.
- Tort reform aims to curb frivolous lawsuits and restore balance in the legal system to help small businesses survive and maintain Georgia’s business-friendly reputation.
Georgia Governor Brian Kemp is pushing for tort reform because the state’s litigation environment is making it difficult for the Peach State’s small businesses to survive. During a roundtable discussion last week, Kemp and other state leaders heard from numerous business owners about the impacts of legal system abuse on their operations.
- The state’s civil litigation system is under scrutiny as businesses argue that it favors plaintiffs, leading to costly and frivolous lawsuits.
- These legal battles are driving up insurance premiums and forcing some insurers to pull back from Georgia markets.
- Proposed tort reform aims to balance the scales as billboard attorneys ramp up their marketing efforts to entice consumers to file lawsuits for claims large and small.
- Georgia vaulted to the top of the Judicial Hellholes report in 2022. This was due in large part to a massive $1.7 billion punitive damages award in a product liability case in Gwinnett County that was riddled with ethically questionable events and severely biased court orders.
- “Unfortunately, 2023 brought about more of the same for the Peach State. Courts across the state continue to award nuclear verdicts and the Georgia Supreme Court issued a disappointing premises liability decision and other liability-expanding decisions that will only make a terrible environment worse,” a recent report from the American Tort Reform Association (ATRA) stated.
- Lawsuit abuse and excessive tort costs wipe out billions of dollars of economic activity annually in Georgia, according ATRA. $1,213.80 annual “tort tax” paid by each Georgia resident, according to a recent study by the Perryman Group. 123,900 jobs are lost each year in Georgia due to legal system abuse, Perryman Group’s report indicated.
- Lawsuits have become a significant pain point for both businesses like those represented here today and the Georgians that they serve,” Kemp said at the business roundtable. “For 10 years, we have remained the number one state in the country for business. If we want to maintain that distinction, this is an issue that we must address.”
- Georgia insurance and safety fire commissioner John King said insurance companies are asking for rate increases of an average of 25% and that while “we’ve been able to keep them about 12-14%,” the pressure is increasing. He said insurance companies are “walking away” from Georgia because of legal system abuse. “We have a challenge where our public thinks that when they get in an (auto) accident, they’ve won the lottery,” King added.
Georgia’s small business community knows we need tort reform to address these serious issues. Please reach out to local politician to voice your concern and support this much needed change.
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Frequently asked questions
What is the tort tax in Georgia?
A Perryman Group study estimated a $1,213.80 annual tort tax paid by each Georgia resident, reflecting the economic cost of lawsuit abuse and excessive tort costs. It also indicated that about 123,900 jobs are lost each year in Georgia due to legal system abuse.
Why is Georgia governor Brian Kemp pushing for tort reform?
After a business roundtable, Kemp said lawsuits have become a significant pain point for businesses and the Georgians they serve. He noted Georgia has been the top state for business for 10 years, and said that if Georgia wants to keep that distinction, the issue must be addressed.
How does litigation affect insurance rates in Georgia?
According to the state's insurance commissioner, insurance companies are asking for rate increases averaging 25 percent, and regulators have held them to about 12 to 14 percent so far, though pressure is increasing. He also said insurers are walking away from Georgia because of legal system abuse.
What is the Judicial Hellholes report and why does Georgia appear on it?
Georgia rose to the top of the Judicial Hellholes report in 2022, largely because of a $1.7 billion punitive damages award in a product liability case in Gwinnett County. A 2023 report from the American Tort Reform Association said courts continued awarding nuclear verdicts.
What does tort reform aim to do?
Proposed tort reform aims to curb costly and frivolous lawsuits and balance the scales in the civil litigation system. Supporters say it would help small businesses survive, reduce excessive legal costs, protect Georgia's economy and jobs, and keep insurance companies from leaving the state.
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