Executive summary

Multiple states have recently considered tort reforms to address a decade-long surge in property and casualty insurance claim costs driven by social inflation.¹ This paper focuses on the tort reform measures recently introduced in Florida and Georgia. The two states have taken different approaches to address social inflation, such as altering rules related to comparative negligence, attorney fee structures, and statutes of limitations. These measures aim to reduce claim frequency and severity, result in fewer frivolous claims, and foster a more balanced judicial environment for plaintiffs and insurers. The effects of the tort reforms enacted in Florida in 2023 have already proven significant, and Georgia may experience similar outcomes.

Tort reform can impact property and casualty lines to varying degrees. The extent of the impact depends on the prevalence of litigation, the types of damages typically awarded, and the influence of attorney fee structures on claim behavior within each line of business.

It is essential that insurers nationwide understand Florida’s and Georgia’s tort reforms, not only to measure the impact to lines of business in these states, but to also understand the implications on insurers’ underwriting guidelines and coverage offerings more broadly.

Overview of recent tort reforms

Florida

In 2019, Florida accounted for just over 8% of homeowners insurance claims in the United States, but was responsible for more than 76% of the nation’s homeowners insurance litigation.² This statistic reflects the challenges within Florida’s judicial system and highlights the state’s unusually high propensity for insurance-related lawsuits, which can contribute to increased claim costs. To address this, on March 24, 2023, Florida signed House Bill 837 (HB 837) into law, which introduced several changes to the state’s civil litigation system.³ Some key provisions of HB 837 that relate to property and casualty claims include, but are not limited to, the following:

• Bad faith claims
• A plaintiff can no longer argue negligence alone to demonstrate bad faith by an insurer.
• An insurer now has no liability for bad faith involving a liability claim if “...the insurer tenders the lesser of the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of a claim which is accompanied by sufficient evidence to support the amount of the claim.”
• When there are multiple claimants in a single action, insurers may now, to limit their bad faith liability, file an interpleader action under the Florida Rules of Civil Procedure, or engage in binding arbitration (if agreed on by the insurer and the third-party claimants), within 90 days after receiving notice of competing claims in excess of the policy limits.
• Attorney fees
• Florida Statutes §§ 627.428 and 626.9373 were repealed. These statutes previously allowed policyholders to recover attorney fees from insurers if the ruling was in favor of the policyholder.
• There is now a more limited ability to recover attorney fees from an insurer after there has been a total coverage denial.
• The contingency fee multiplier, a court-approved increase to an attorney’s fees in cases where the attorney took a high-risk case and only gets paid if the attorney wins, has been updated to match the federal standard of applying in rare and exceptional circumstances.
• Negligence and liability
• Florida’s comparative negligence system changed from a “pure” comparative negligence system to a “modified” comparative negligence system. This means that a plaintiff who is found to be more than 50% at fault for their own harm may no longer recover damages from any defendant.
• The statute of limitations for general negligence cases was reduced from 4 years to 2 years.⁴
• Premises liability
• The owner or principal operator of a multifamily residential property now has a presumption against liability in connection with criminal acts that occur on the premises if they have implemented specific security measures.⁵

HB 837 has already started to reduce social inflation in Florida, leading to a decrease in both claim frequency and severity. For example, litigation between plaintiffs and auto insurance companies over auto glass repairs has dropped from 24,720 lawsuits in the second quarter of 2023 to 2,613 lawsuits in the same period of 2024.⁶ Additionally, from 2009 to 2022, Florida ranked second in the nation for nuclear verdict payouts. Following the enactment of HB 837, the state’s ranking dropped to tenth place in 2024.⁷

Georgia

Georgia is another state with a high number of nuclear verdict payouts ranking fourth in the nation on a per capita measure between 2013 and 2022.⁸ To address this, Georgia has changed its civil litigation system by signing Senate Bills 68 and 69 (SB 68 and SB 69) into law on April 21, 2025.^9,10 Some key provisions of SB 68 that relate to property and casualty claims include, but are not limited to, the following:

• Elimination of “phantom damages”
• Phantom damages are the difference between what providers bill and what insurers pay, which plaintiffs could previously claim as damages in court.
• Plaintiffs can now only seek damages for the amount actually paid for medical bills, not the price the hospital or other medical facility provided prior to adjustment from the insurer.
• Restrictions on attorney fees
• A plaintiff can now only recover attorney fees, court costs, or expenses of litigation once per civil action regardless of the number of claims or statutory grounds.
• A contingent fee agreement between the plaintiff and their attorney is no longer admissible proof of the reasonableness of the attorney fee amount to be awarded.
• Reformed negligent security liability
• SB 68 responded to a 2023 Georgia Supreme Court case¹¹ and reformed the negligent security liability standard. There is now a narrower scope a plaintiff may pursue to successfully bring forth a negligent security claim, especially for crimes committed by third parties. The evidentiary standards to bring forth a negligent security claim are also stricter now.
• Trial bifurcation
• In an action to recover damages for bodily injury or wrongful death, either party may now request to have court proceedings in two phases: one for determining liability and one to determine damages. This approach may lead to a more objective jury when determining the damages to be awarded as the jury will not be influenced by emotional appeals regarding the damages amount award before the defendant has been found guilty.
• Introduction of seatbelt use evidence
• It is now permissible to use evidence that the plaintiff was not wearing a seatbelt for the issues of negligence, comparative negligence, causation, assumption of risk, or apportionment of fault. This evidence can be used to diminish recovery for damages arising out of the ownership, maintenance, occupancy, or operation of a motor vehicle and thus lower the auto insurance claims cost an insurer must pay.

In addition to the tort reforms found in SB 68, SB 69 furthers Georgia’s tort reforms by regulating third-party litigation funding. Some key provisions of SB 69 regarding regulating third-party litigation funding include, but are not limited to, the following:

• Third-party litigation agreements are now discoverable.
• Third-party litigation funders must register with the Georgia Department of Banking and Finance beginning January 1, 2026. This means that third-party litigation funders will be subject to oversight by Georgia.
• Third-party litigation contracts must now provide a notice to the plaintiff which states that the third-party litigation funder cannot influence, affect, or make any decision in the plaintiff’s case.
• Third-party litigation funders may now be held jointly and severally liable for frivolous litigation.

While it is still too early to measure the impact of SB 68 and SB 69 on reducing social inflation, these bills may be effective in reducing claim frequency and severity as they address many of the underlying drivers of social inflation.

Florida and Georgia are just two examples of states that have recently passed tort reforms aimed to decrease claim frequency and severity which could lead to reducing social inflation. More states may introduce similar tort reforms in the future. For example, South Carolina has a pending bill that would introduce comparative fault, thus reducing the damages an insurer would pay to the proportion their insured was at fault.¹² Therefore, it is important to continue monitoring bills being introduced across the United States as more states try to combat social inflation.

Impact by line of business

The tort reforms enacted in Florida and Georgia will most likely affect property and casualty lines differently. Figure 1 summarizes the anticipated level of impact across major lines of business.

Implications for actuaries

Adjust claim frequency models

Actuaries should consider adjusting claim frequency models due to tort reforms introduced by states like Florida and Georgia. Where practical, it may also be beneficial for actuaries to model litigated and nonlitigated claims separately, allowing for more precise adjustments to frequency (and severity) assumptions for litigated claims in response to these legislative changes. In Florida, the frequency of litigated insurance claims has decreased since the passage of its tort reform bill.¹³ Similar decreases may happen in other tort reform states, as these measures reduce the incentives for plaintiffs and attorneys to pursue litigation over insurance claims, primarily by limiting the potential for large awards. For example, Georgia has removed phantom damages from jury awards, potentially discouraging plaintiffs and their attorneys from pursuing cases if the anticipated recovery does not justify the expense. Moreover, with states capping attorney fees, attorneys may be less motivated to seek and pursue clients with potential claims against insurers. Consequently, litigation of insurance claims may decrease, as an increased number of plaintiffs will have to seek counsel to initiate the litigation.

Therefore, in tort reform states, claim frequency may decrease for two main reasons. First, insureds may be less likely to file questionable or borderline claims because they face a harder path to win or recover full damages. Second, plaintiffs’ attorneys may be less willing to take such cases since they can no longer easily recover fees or sue under bad faith.

Adjust claim severity models

In addition to adjusting claim frequency models, actuaries may also need to adjust claim severity models in response to tort reforms. Florida’s nuclear verdicts dropped after reform, and similar decreases in claim severity may happen in other states. One reason for this is the capping of attorney fees, which used to be a large expense if the plaintiff prevailed against the insurer. Additionally, some states are modifying the comparative fault rules, such as South Carolina’s proposed system, which means insurers will only pay damages proportional to their insured’s degree of fault. These factors together suggest a decrease in expected payout amounts in tort reform states.

Re-evaluate rate indications

Lastly, actuaries must consider the impact of the tort reforms on rate indications. After Florida passed HB 837, the Florida Office of Insurance Regulation required insurers to consider the potential prospective reduction in loss costs in personal passenger auto rate filings.¹⁴ United Automobile Insurance Company estimated a 13% reduction to the number of litigated claims, a 10% reduction in loss severity of litigated claims, and a 10% reduction in allocated loss adjusted expenses as a percent of loss.¹⁵ State Farm Fire and Casualty Company estimated the decrease in loss costs due to the comparative negligence reform as 2.3% and 0.8% for bodily injury and property damage, respectively, and the decrease in loss costs for the reduction in attorney fees as 5.1% for personal injury protection.¹⁶ Since the reform, major carriers such as GEICO, Progressive, and State Farm have filed for rate decreases of −10.5%, −8.1%, and −6%, respectively.¹⁷ Additionally, among all insurers in Florida, the average rate increase has dropped from 21% in 2023 to a projected 0.2% in 2025.^18,19

The Georgia Office of Insurance and Safety Fire Commissioner has not released a requirement to consider SB 68 and SB 69 in upcoming rate filings, but insurers should be prepared to estimate the impacts. Some effects of the reforms could be readily measurable, such as the savings from attorney fee caps. In these cases, insurers can restate historical closed claim data under the new limits to quantify the reduction in prospective loss costs. Other impacts, such as lower claim frequency resulting from diminished potential awards, may be harder to quantify immediately. Under these circumstances, actuaries can make well-documented initial assumptions, monitor emerging experience, and adjust as needed.

Other considerations for insurers

Update underwriting guidelines

An insurer may want to update its underwriting guidelines in states that have introduced tort reforms. As tort reforms may reduce claim frequency and severity, applicants who were once determined to be too risky may now become eligible for coverage. Insurers may also revise their underwriting guidelines to offer higher liability limits or broader coverage options, as claim frequency and severity in tort reform states may now be lower. Lastly, insurers may want to update their underwriting guidelines to enter or expand into markets previously declined. For example, 12 new property and casualty insurers entered the Florida market since the state started enacting its tort reforms.²⁰ This is in contrast to more than 30 insurers leaving the state or removing coverage in the 3 years leading up to the reforms.²¹

Create new insurance coverages

Lastly, an insurer may want to consider creating new insurance coverages in response to the introduction of tort reforms in various states. For example, an insurer may consider creating an endorsement that will pay for the insured’s attorney fees and related legal costs for first-party property insurance claims that the insured successfully litigates against the insurer. This would be of particular importance in Florida, as the state’s tort reforms no longer allow for attorney fees in most cases. Because tort reforms have reduced certain awards previously available to prevailing plaintiffs, insurers can proactively develop coverages to fill these newly created gaps.

Conclusion

Florida and Georgia’s recent tort reforms may be a significant first step in controlling the effects of social inflation. By capping or eliminating certain attorney-fee awards, shortening statutes of limitation, and increasing transparency around third-party litigation funding, these states may reduce claim frequency and severity. The tort reforms may help stabilize loss costs, create a more balanced litigation environment, and potentially expand insurance capacity in lines that have recently been constrained.

Looking ahead, the tort reforms enacted in Florida and Georgia may serve as examples for the rest of the country as other states consider similar measures. With the property and casualty market facing persistent challenges from elevated claim costs and ongoing instability, these reforms may represent an important move toward restoring balance and sustainability. As these legislative changes take effect, they offer an opportunity for insurers to reassess their strategies. The challenge will be identifying and implementing the right changes. Insurers that can quickly and thoughtfully adapt their pricing, underwriting, and coverage offerings may be better positioned in the market as the environment continues to evolve. Ultimately, the coming years will reveal not only the effectiveness of these reforms but also which insurers can turn regulatory change into a competitive advantage.

---

¹ See Assessing social inflation’s disruption to data, metrics, and forecasts: 10 mitigation strategies at https://www.milliman.com/en/insight/Assessing-social-inflations-disruption-to-data-metrics-and-forecasts-10-mitigation-strategies.

² O’Connor, A. (2021, April 14). NAIC data: Florida property lawsuits total 76% of insurer litigation in U.S. Insurance Journal. https://www.insurancejournal.com/news/southeast/2021/04/14/609721.htm#.

³ See Florida House Bill CS/CS/HB 837, 2023-2024 Florida Legislature at https://www.flsenate.gov/Session/Bill/2023/837/BillText/er/PDF.

⁴ There are protections for service members during terms of active duty that materially affect the service member’s ability to appear at a court date.

⁵ Examples of safety measures include, but are not limited to, installing security cameras, lighting parking lots and walkways, and providing crime prevention training for employees.

⁶ Executive Office of the Governor. Ron DeSantis, 46th Governor of Florida. (2025, February 5). Governor Ron DeSantis announces rate reductions for Miami-Dade County, auto insurance reductions statewide, and 11 new companies entering Florida’s market. https://www.flgov.com/eog/news/press/2025/governor-ron-desantis-announces-rate-reductions-miami-dade-county-auto-insurance.

⁷ Marathon Strategies. (n.d.). Corporate verdicts go thermonuclear, 2025 Edition. https://marathonstrategies.com/wp-content/uploads/2025/05/Nuclear-Verdicts-Report-2025.pdf.

⁸ Silverman, C., & Appel, C. E. (2024, May). Nuclear verdicts: An update on trends, causes, and solutions. U.S. Chamber of Commerce Institute for Legal Reform. https://instituteforlegalreform.com/wp-content/uploads/2024/05/ILR-May-2024-Nuclear-Verdicts-Study.pdf.

⁹ See Georgia Senate Bill 68, 2025-2026 Georgia Legislature at https://www.legis.ga.gov/api/legislation/document/20252026/236944.

¹⁰ See Georgia Senate Bill 69, 2025-2026 Georgia Legislature at https://www.legis.ga.gov/api/legislation/document/20252026/238603.

¹¹ See Georgia CVS Pharmacy, LLC v. Carmichael, S22G0527 (Ga. 2023) https://law.justia.com/cases/georgia/supreme-court/2023/s22g0527.html. The Georgia Supreme Court ruled in favor of the plaintiff who was shot several times in a CVS parking lot in Atlanta, Georgia, awarding him almost $43,000,000 to be paid by CVS for negligent security. In Justice McMillian’s concurring opinion, she acknowledged that it is in the hands of the legislature to reform the negligent security liability standard.

¹² See South Carolina Senate Bill S. 244, 2025-2026 South Carolina Legislature at https://www.scstatehouse.gov/sess126_2025-2026/bills/244.htm.

¹³ Theodorou, J. (2025, March 5). Florida tort reform: Happy second birthday. Insurance Journal. https://www.insurancejournal.com/blogs/right-street/2025/03/05/814409.htm.

¹⁴ See Florida Statute § 627.40952 (2023) at https://www.flsenate.gov/Laws/Statutes/2023/0627.40952.

¹⁵ Florida Office of Insurance Regulation. (2024). United Automobile Insurance Company, personal private auto rate filing (Filing No. 24-068987).

¹⁶ Florida Office of Insurance Regulation. (2024). State Farm Fire and Casualty Company, personal private auto rate filing (Filing No. 24-069284).

¹⁷ Executive Office of the Governor. Ron DeSantis, 46th Governor of Florida. (2025, February 5). Governor Ron DeSantis announces rate reductions for Miami-Dade County, auto insurance reductions statewide, and 11 new companies entering Florida’s market. https://www.flgov.com/eog/news/press/2025/governor-ron-desantis-announces-rate-reductions-miami-dade-county-auto-insurance.

¹⁸ ibid.

¹⁹ Regarding the figures in this paragraph, Milliman has not produced an estimate for the impact of HB 837 and is not commenting on the reasonableness of these exact figures. These figures are included to discuss the directional impact of HB 837 in the industry.

²⁰ Elliott, S. (2025, April 7). Commissioner Yaworsky announces 12th property insurer entering the market since legislative reforms. Florida Office of Insurance Regulation. https://floir.com/home/2025/04/07/commissioner-yaworsky-announces-12th-property-insurer-entering-the-market-since-legislative-reforms .

²¹ The National Association of State Credit Union Supervisors. (n.d.). Can lawmakers save the collapsing Florida home insurance market? https://www.nascus.org/2023/09/21/can-lawmakers-save-the-collapsing-florida-home-insurance-market/ .