Tort reform in Georgia is changing the legal landscape, but experts warn businesses should not relax their safety measures or insurance coverage. Chip Renno, a principal at Snellings Walters Insurance Agency, advises clients to continue their risk management practices to avoid potential claims.
The recent reforms aim to cut down on frivolous lawsuits, but their true impact is still uncertain. Renno believes it will take at least a couple of years to fully understand how these changes will affect general liability, product liability, and auto insurance. During this time, brokers need to reinforce best practices as the legal environment continues to evolve.
Some businesses see tort reform as a sign that litigation risks are decreasing and are reconsidering their insurance expenses. However, Renno cautions against this approach. He believes that litigation will persist, as attorneys may find new ways to work around the law. Ongoing court challenges could also alter how these reforms are applied.
Renno points out that it will take time to see if insurance companies will experience fewer claims and whether rates will drop. In the meantime, businesses that cut back on their coverage may expose themselves to unexpected risks.
Insurance costs have risen significantly for many manufacturers, particularly midsize firms that are caught in the middle of market fluctuations. Renno notes that self-insurance pools, known as group captives, can provide more stability and control for companies that qualify based on their claims history and financial strength.
Additionally, umbrella coverage, which used to provide extensive protection, is now under pressure. Insurers are scaling back the limits they offer, leading brokers to piece together coverage from different markets, often at higher costs. Many clients are also reducing their coverage limits due to these increased expenses.
Supply chain disruptions, worsened by the pandemic, continue to affect insurance decisions. If businesses struggle to get materials on time, their sales volume may drop, complicating their liability coverage. Brokers have had to adjust policies as financial conditions change.
Insurers are also becoming more cautious about underwriting higher-risk operations. Renno explains that brokers are exploring various markets, including excess and surplus lines, to find the best options for their clients.
Despite the changes in the legal landscape, the fundamental principles of insurance remain the same. Renno emphasizes that safer businesses with fewer claims are viewed as better risks, which can lead to more competitive premiums. For manufacturers, this means ongoing investments in safety practices and smart insurance choices are essential.
While tort reform may alter how lawsuits are filed, it does not eliminate the risk of litigation or the financial consequences that come with it. Brokers and their clients need to view insurance as a strategic tool rather than just a cost to cut.