Washington has no shortage of speeches about affordability. Every week brings a new press conference about the rising cost of living and the financial pressure facing American families. You see its impact most clearly in auto insurance, where premiums have stayed stubbornly high even as inflation has cooled elsewhere.
The American middle class is straining under rising prices and stagnant wages. Families are tired of an economy where everything costs more, and nothing seems to change.
But there is a solution to the rising spiral of costs. One that lowers costs without raising taxes or expanding government. It starts with confronting a major but overlooked driver of inflation: lawsuit abuse.
The signs are everywhere: the billboards, the bus ads, the incessant TV ads promising free consultations and large settlements. These aren’t just ads. They are the storefront for a high-volume lawsuit industry built to generate as many claims as possible. More claims mean more settlements, which means more costs that get passed along to consumers, usually in the form of higher insurance premiums or more expensive goods and services.
According to one study by The Perryman Group, excessive litigation acts like a hidden surcharge on the cost of living. The report found that litigation abuse adds 9% to the cost of prescription medications, more than 4% to home insurance, and even raises the price of simple household necessities like soap and detergent by more than 2%. In total, the study estimates that the lawsuit-driven inflation built into the economy costs the average American household more than $5,000 every year.
Fortunately, two states, Florida and Georgia, have shown that reforming the system brings immediate relief.
Florida offers the strongest proof yet. For years, Florida had become the center of America’s insurance-lawsuit problem. Although the state has only about 9% of the nation’s homeowners insurance policies, it accounted for nearly 80% of all homeowners insurance lawsuits nationwide.
In 2023, Florida passed a major reform law to fix this. They made it harder to file questionable lawsuits, reduced the financial incentives that encouraged attorneys to flood the system with claims, and closed loopholes that had allowed contractors and medical providers to inflate costs.
The impact was immediate. Within a year, property-insurance lawsuits dropped by nearly one-third, and Florida saw the lowest insurance rate increase in the nation – with 27 private carriers filing for rate decreases.
Even more important for families, auto-insurance rates are now falling. Florida’s major auto insurers — including GEICO, Progressive, and State Farm — have all filed for rate reductions after years of sharp increases. Reports show cuts of up to 20%, with state officials crediting the reforms for stabilizing claims and reducing lawsuit risk. All told, these reforms will lower auto-insurance rates for nearly 80% of Floridians.
Florida didn’t solve every problem in its insurance market (they cannot eliminate hurricanes), but what they did was remove the incentives that fueled unnecessary lawsuits, and the savings are finally reaching consumers.
Georgia took the lesson to heart. Long known for “nuclear verdicts” and unpredictable liability rules, Georgia faced soaring insurance premiums and rampant fraud. Earlier this year, lawmakers passed reforms to let juries see the real cost of medical treatment instead of inflated sticker prices, limit legal tactics that drove runaway verdicts, and reined in abusive case filing practices.
Just this week, Georgia Insurance Commissioner John F. King announced that State Farm would reduce auto insurance rates by another 3%, bringing total cuts this year to more than 10%. His office estimates this will save State Farm policyholders roughly $400 million annually. “People are getting crushed,” King said in the announcement. “It’s our job to move every lever we can to lower costs.”
These reforms worked because they targeted an unseen but enormous economic pressure point: litigation risk. When lawsuits become more predictable and less exploitable, insurers price policies lower, contractors pay less in liability coverage, trucking costs fall, and local governments avoid draining settlement budgets. Families benefit in the form of lower premiums and lower prices.
If policymakers want to get serious about affordability, they should start where two states have already succeeded: reforming the lawsuit economy that quietly makes everything—from insurance to groceries to city parks — more expensive than it needs to be.
