ATLANTA (AP) — The pitch from Georgia Gov. Brian Kemp is simple: Putting limits on lawsuits will halt rising insurance costs.

The reality, though, is more complicated.

Changes could reduce liability insurance costs for businesses and commercial property owners. The evidence is mixed on whether it would drive large premium reductions for car and other types of insurance. And some researchers say efforts limiting lawsuits, often called tort reform, fattens insurers’ profits more than it cuts the price of policies.

“The net impact is that it really improves insurer profitability,” said Tyler Leverty, a business professor who studies risk and insurance at the University of Wisconsin-Madison.

When Kemp unveils his proposals Thursday, the Republican governor is likely to keep leaning on his argument that everyone’s insurance rates are increasing because unfair lawsuits are on the rise and juries are awarding excessive damages.

The issue is Kemp’s top priority this year after promising the Georgia Chamber of Commerce he would take action and instead pushed a law to have Georgia Insurance Commissioner John King gather data in 2024.

King said that lawsuits are driving insurance companies to reduce coverage for retail businesses, apartment owners, drivers and others. He said business owners in areas that insurers label as high crime are among those struggling the most. Companies that offer low-income housing have also complained.

“Go down to southeast Atlanta and talk to the small convenience owners having to close because they can’t find insurance,” King said.

Are unfair lawsuits and big jury awards real problems?

Some say there’s no evidence that a nationwide litigation crisis is driving high insurance rates.

“I went in search of the data, and I have not found it,” said Kenneth Klein, a law professor at California Western School of Law. “It’s not to say it isn’t happening. It’s to say we cannot document it.”

But Mike Iverson of Oakbridge Insurance and former president of the Independent Insurance Agents Association said insurance companies like predictability when determining rates and how to spread out losses.

In a well-known case, a jury awarded a man almost $43 million after a shooting in a CVS parking lot in Atlanta, arguing the company should have strengthened security. In another case, a Jonesboro mobile home park was ordered to pay $31 million to the daughter of a man who was shot and killed there.

Opponents note that few verdicts are that large and insurance companies are still profitable. They want lawmakers to demand more transparency on how they set rates.

“Whenever they want an excuse to raise rates or limit coverage they will always point to a verdict here and there and make all kinds of claims about how it’s affecting their bottom line,” said Joanne Doroshow, executive director of the Center for Justice & Democracy at New York Law School.

Studying how tort reform impacts premiums in other states is difficult because other factors are in play and there are different combinations of reform. Some saw benefits, but the research varies.

What drives rates?

Other factors that influence insurance rates include inflation, extreme weather, and the costs of labor and materials. It is normal for insurance markets to cycle through tough years where less coverage is offered as rates rise.

In many lines of coverage, including those not heavily impacted by lawsuits, insurers in 2022 were less profitable in Georgia than in several other states, according to data from the National Association of Insurance Commissioners. A spokesperson said over a longer period, though, nothing is abnormal about Georgia’s fluctuations.

King’s report, using mostly auto insurance data, says the number of claims and the size of resulting payments have risen over the years, especially those involving lawsuits. Some numbers dropped in 2022 and 2023, but he said that was because the data is incomplete.

King also found that a greater percentage of legal claims are resulting in payments that hit the maximum dollar amount a policy covers.

The Georgia Trial Lawyers Association, which lobbies against tort reform, disputes King’s conclusions.

Risk consultant David Stegall said the number of claims is in line with Georgia’s high number of car accidents. Both claims and payouts have mostly been stable or falling, especially when adjusted for population growth and inflation, he said.

He also found that while Georgia residents pay between 11% and 68% more for car insurance than residents of other states, they are more than 200% more likely to be in an accident.

Adam Willis, president of trucking firm F&W Transportation, said his company’s premiums have doubled over the last 10 years while fewer insurers offer full coverage. His company also has been sued more often, he said.

Defenders of the current system say the trade-offs of lawsuit limits are a bad deal.

“The governor says that limiting your right as a consumer will lower your insurance costs, but that is not only a bad idea for everyday citizens, it’s just not correct,” said state Rep. Tanya Miller, an Atlanta Democrat.

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