Georgia Insurance Market Faces Profitability Challenges and Prospects

Georgia's insurance market faces significant challenges, as highlighted by a recent Georgia House of Representatives committee report. Industry profitability is among the lowest nationally, which could impact premium costs unless legislative measures are taken. The state is home to over 400 personal policy insurers and around 500 commercial line carriers, but diminishing profitability is prompting some companies to reconsider their market presence.

Despite being the tenth-largest market for Property and Casualty premiums, Georgia ranks near the bottom in profitability, placing 50th out of 51, including the District of Columbia. Persistent conditions may lead insurers to further reduce market capacity, potentially increasing premiums. Factors contributing to this scenario include inflation, rising medical costs, and expensive litigation trends.

Challenges in the Georgia Insurance Market

The National Small Business Risk Index for 2025 highlights the rising financial burden of claims, with the average business liability claim now at $97,220, marking an 18% increase since 2022 due to escalating medical expenses and litigation costs. The insurance market in Georgia is currently described as particularly challenging, with a reduction in available options and competition leading several reputable carriers to withdraw and allocate capital elsewhere.

Despite these challenges, recent tort reforms are viewed positively by some industry experts, predicting possible market stabilization similar to Florida, where rates decreased by about 6.5%. Georgia’s Insurance Commissioner has expressed concerns over insurers potentially exiting the market and is advocating for legislative changes, including imposing larger fines on insurance companies and capping excessive profits from auto insurance.

Recent Developments and Future Outlook

Amidst these changes, some positive rate adjustments have emerged. Liberty Mutual and Citgo have announced a 5% rate decrease for drivers, while State Farm has implemented an approximate 10% reduction over the year. Moving forward, the committee chair anticipates legislative proposals addressing these insurance market challenges, aimed at fostering a more competitive and sustainable environment for insurers and policyholders in Georgia.