TOP
In an effort to address the societal challenge of “shock” verdicts, social inflation, and legal system abuse, a handful of states in recent years have begun enacting legislation aimed at reducing insurance costs and bringing premium relief to financially strapped policyholders who have seen auto insurance premiums increase 55% since February 2020 on average, with nearly all of it taking place between 2022 and 2024.1
The initial results are now in, with some evidence of reduction in losses, fewer lawsuits, and significant premium relief. Where do things stand?
Florida enacted its tort reform package in 2023, which included ending of assignment of benefits, elimination of one-way attorney’s fees, the enactment of a new modified comparative negligence standard, and a reduction in the statute of limitations from four to two years.2
With the passage of time, quantifiable results are now being seen. In December USAA announced nearly $4 billion in policy dividends, followed by a June announcement that it would be refunding $500 million to its Florida auto policyholders, citing tort reform as the key factor that made the distribution possible.3 Further, the company reported that during the first half of 2026, rate reductions averaged 14% (via two filings) and that roughly half of its policyholders would see reductions in their six-month auto premiums during 2026.4
USAA’s actions represent a growing statewide trend fueled by legal reform, as reflected in a recent report that shows more than 40 Florida auto insurers have filed for rate decreases since January 2025.5 Further, economist Ray Perriman calculates that because of the reform package, Floridians now pay roughly 14.5% less for insurance, have seen an estimated $4.2 billion increase in business activity, and witnessed the creation of more than 29,000 jobs.6
Beyond premium reduction, Florida policyholders now have a greater number of insurers from which to choose coverage. In May, Florida Insurance Commissioner Mike Yaworski reported that 20 property and casualty carriers had entered the market, in turn deploying more than $850 million in new capital that will support the state’s property market.7
Driving this brightening picture has been a dramatic drop in lawsuit frequency and defense costs. During the first half of 2026, lawsuit filings plummeted 20% year-over-year (the third straight year of double-digit decreases), with defense costs falling 24% between 2022 and 2025.8
Because they are more recent, the similar 2025 reforms enacted in Georgia, Louisiana, and Oklahoma have not yet yielded the benefits realized in Florida. Beginning in 2023 with a bill that authorized data collection and mandated reform recommendations from its insurance commissioner,9 Georgia adopted a new premises liability standard to curb lawsuit abuse on habitational risks, bifurcated trials, and excluded unsupported medical bills. Georgia also added Third Party Litigation Funding (TPLF) disclosure requirements with mandatory registration with and regulation from the state’s Department of Banking and Finance.10
After passing comprehensive TPLF reform in 2024, Louisiana enacted a reform package the following year that ended “pure” comparative negligence, prohibited uninsured drivers from recovering the first $100,000 in bodily injury or property damage following an accident, eliminated the “Housley Presumption” (which presumed that an accident caused a plaintiff’s injury if certain conditions were met), and gave a premium discount to commercial vehicles equipped with dashcams and telematic systems.11 The legislation came about in part because of a number of widely publicized “staged” motor vehicle accidents, most notably those being orchestrated by a New Orleans-based ring that targeted tractor trailers along a 14‑mile stretch of Interstate 10 where serious accidents occurred far more frequently than in other areas with similar traffic patterns.12
For its part, in addition to TPLF disclosure, Oklahoma reinstated a cap on non-economic damages in bodily injury cases, with key provisions that include a $500,000 cap on non-economic damages and a $1,000,000 cap on mental anguish damages, subject to a carve-out for permanent and severe injuries, as well as a new law that creates an expedited path for civil actions in which the parties agree to a $250,000 cap on damages.13 Supporters argue that damage caps provide certainty by taking the prospect of a runaway jury verdict off the table, while also reducing frivolous lawsuits, supporting consumers, and promoting economic growth.14 With these reforms, Oklahoma now joins nine states that cap non-economic damages in general tort and personal injury cases, including Colorado, Idaho, Alaska, and Ohio.15
Although comprehensive legal reform remains largely confined to the South, momentum for TPLF regulation has spread countrywide. In 2025, Arizona, Colorado, and Kansas joined the above-mentioned states in passing some measure of TPLF reform.16 In July, Ohio enacted legislation that requires TPLF entities to register with the state’s attorney general, bringing to eight the number of states that require such registration.17 In all, 13 states have enacted laws that regulate TPLF, with another 18 having introduced but not yet passed similar bills.18
While a growing number of states contemplate regulating TPLF, only one has banned it outright as North Carolina did in June with passage of HB 315.19 This dramatic move, which enjoyed near bipartisan support, may serve as a template for other state legislatures going forward.20
Like many other elements of economic, social, and political life, attitudes toward legal reform have shifted like a pendulum for decades. We’ve seen this before, as long ago as the late 1970s and early 1980s, when soaring loss costs and an evaporating liability insurance marketplace gave rise to public entity risk pools and physician-owned insurers, which led to legislative remedies that included caps on non-economic damages, punitive damages, and in some instances collateral source reform.21 While we are a long way from the dark days of the late 1970s and early 1980s (when combined ratios well above 100 were common),22 one senses a growing recognition that rising loss costs are making insurance increasingly unaffordable and hindering economic growth.
Whether this gives rise to a new wave of reform remains to be seen. Regardless, any changes will be isolated and far from a panacea, by no means serving as a replacement for astute risk selection, appropriate underwriting approaches, and claim handling practices that both recognize and respond to an ever-changing society.
