Georgia has seen a significant decline in the affordability of personal auto insurance over the past decade and a half, according to a recent report from the Insurance Research Council (IRC).

The report, titled “Affordability of Personal Auto Insurance in Georgia,” highlights the state’s increasing insurance spending relative to median household income.

In 2022, personal auto insurance expenses in Georgia were 2% of the median household income, compared to about 1.5% nationally. That put Georgia 47th in the nation for auto insurance affordability, with only Louisiana, Florida, Mississippi and New York ranking lower.

The state’s standing has deteriorated significantly since 2006, when Georgia ranked 27th in cost of living.

The report notes that from the mid-2000s through 2014, Georgians spent about the same amount on auto insurance as the national average. However, starting in the mid-2000s, auto insurance spending in Georgia began to rise faster.

Between 2014 and 2022, auto insurance spending in the state grew at an annual rate of 5.6%, compared to 3.3% nationally, and faster than any other state. In 2022, Georgia’s average spending was $1,347, which was 20% higher than the U.S. average.

Affordability challenges in the Georgia auto insurance market are linked to several factors, including economic inflation, high replacement costs, poor driving behavior, and abuse of the legal system.

Read more: Michigan Auto Insurance Reforms Help Improve Affordability – IRC

The report noted that Georgia has higher levels of some cost drivers, such as the tendency to file injury claims after an accident, the prevalence of underinsured motorists, and the frequency of claims litigation.

Auto insurance claims litigation is a growing concern in Georgia, with the report suggesting that tort reform in neighboring states may prompt law firms to seek opportunities in Georgia, contributing to higher rates for lawyer advertising, especially on television.

Dale Porfiglio, IRC Chairman and Chief Insurance Officer at the Insurance Information Institute (Triple-I), commented on the impact of uninsured or underinsured motorists on affordability.

He noted that as affordability deteriorates due to rising costs or slowing income growth, more drivers may choose to lower their policy limits or forgo mandatory insurance altogether. This trend increases the need for drivers to purchase uninsured motorist (UM) and underinsured motorist (UIM) protection, increasing average insurance expenses.

Porfilio emphasized that UM and UIM rates are higher than the national average in Georgia, with the state’s UIM rate being particularly high. In 2022, Georgia had the third-highest UIM rate in the country, and that rate has been steadily increasing over time.

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