Georgia’s Reforms: Potential Unintended Impacts on Market Dynamics
Georgia lawmakers ushered in the New Year with two significant consumer-focused statutes that recognize a fundamental truth: Time is money. These new laws, enacted in May and April 2025, aim to address critical issues in homeowners insurance and litigation finance, respectively.
Georgia Act 277 modifies the notice period for homeowners insurance nonrenewals, extending it from 30 days to 60 days. This change addresses a persistent issue in the insurance market where policyholders often lacked sufficient time to secure replacement coverage, leading to serious financial repercussions.
Act 277: Fixing a Structural Timing Problem in Insurance
Replacing homeowners insurance is rarely instantaneous. Most consumers depend on brokers to gather financial documentation, verify credit and income, and shop for coverage across multiple carriers. Even under optimal conditions, this process can take several weeks. A 30-day nonrenewal window often forced homeowners into a precarious situation with both insurers and lenders, leaving little room for delays.
Once coverage lapses, borrowers may find themselves in technical default under standard mortgage covenants that require continuous insurance. Many homeowners escrow their insurance payments through lenders, meaning a lapse can trigger force-placed coverage at significantly higher costs, leading to disputes. If a loss occurs during this gap, questions of responsibility can quickly escalate into litigation driven by timing rather than fault.
By extending the notice period, Act 277 mitigates the risk of coverage gaps that can lead to cascading financial and legal issues. This change reduces the likelihood of post-loss disputes among homeowners, insurers, and lenders when a casualty occurs during a lapse created by nonrenewal timing rather than consumer neglect. Importantly, this adjustment imposes minimal operational burden on insurers, making it a targeted statutory fix that stabilizes the market by aligning legal timelines with actual insurance placement practices.
SB 69: Regulating Litigation Finance Through Broad Structural Reform
The Georgia Courts Access and Consumer Protection Act (SB 69) represents a more complex response to third-party litigation financing. These arrangements provide plaintiffs with funds during pending litigation in exchange for a contingent interest in any recovery.
Concerns surrounding SB 69 are well-founded. Over the past decade, venture capital and large out-of-state investors have aggressively entered the litigation funding market, targeting lower-value personal injury cases, particularly automobile accidents. Many consumers were unaware of the effective interest rates being charged, which sometimes exceeded 40% annually.
While litigation financing plays a legitimate role by helping plaintiffs cover basic living expenses, it also reduces the leverage insurers gain by slowing the litigation process. SB 69 addresses this by imposing registration requirements, disclosure obligations, and restrictions on funder involvement in litigation decisions. However, these measures significantly increase compliance costs, potentially pushing smaller, ethical funding companies out of the market.
The effects of SB 69 will become evident next year. Advances for smaller cases, such as modest automobile accident claims, will likely continue, but funding for larger, more complex matters will become rarer due to the need for in-depth evaluation and greater risk. Furthermore, the law does not cap interest rates, meaning that rates may remain high or even increase, particularly as more ethical players exit the market due to compliance costs.
Historically, litigation funding operated differently, with financial support flowing through professional relationships between attorneys rather than through scaled commercial enterprises. This earlier model benefited consumers with reasonable rates, but it has since evolved into a venture-backed operation emphasizing volume and aggressive marketing.
Critics argue that the law’s structure is flawed. Instead of establishing a clear cap on permissible rates, the layered regulatory requirements may inadvertently push small players out of the market while doing little to regulate the actual rates charged to consumers.
As Georgia continues to refine its approach to consumer protection and tort reform, these statutes serve as a reminder that effective regulation often hinges on precision. Where risk arises from unrealistic timelines, modest statutory adjustments can yield meaningful results. In more complex markets, however, over-engineered solutions may limit access to only those larger players capable of bearing the regulatory burden, ultimately failing to protect the very consumers the reforms aim to assist.
Atlanta lawyer Matthew Stoddard, who transitioned from defending corporations in injury and wrongful death litigation to representing plaintiffs since 2011, is admitted to the Bar in Georgia and North Carolina.
Topics
Georgia
Georgia lawmakers ushered in the New Year with two significant consumer-focused statutes that recognize a fundamental truth: Time is money. These new laws, enacted in May and April 2025, aim to address critical issues in homeowners insurance and litigation finance, respectively.
Georgia Act 277 modifies the notice period for homeowners insurance nonrenewals, extending it from 30 days to 60 days. This change addresses a persistent issue in the insurance market where policyholders often lacked sufficient time to secure replacement coverage, leading to serious financial repercussions.
Act 277: Fixing a Structural Timing Problem in Insurance
Replacing homeowners insurance is rarely instantaneous. Most consumers depend on brokers to gather financial documentation, verify credit and income, and shop for coverage across multiple carriers. Even under optimal conditions, this process can take several weeks. A 30-day nonrenewal window often forced homeowners into a precarious situation with both insurers and lenders, leaving little room for delays.
Once coverage lapses, borrowers may find themselves in technical default under standard mortgage covenants that require continuous insurance. Many homeowners escrow their insurance payments through lenders, meaning a lapse can trigger force-placed coverage at significantly higher costs, leading to disputes. If a loss occurs during this gap, questions of responsibility can quickly escalate into litigation driven by timing rather than fault.
By extending the notice period, Act 277 mitigates the risk of coverage gaps that can lead to cascading financial and legal issues. This change reduces the likelihood of post-loss disputes among homeowners, insurers, and lenders when a casualty occurs during a lapse created by nonrenewal timing rather than consumer neglect. Importantly, this adjustment imposes minimal operational burden on insurers, making it a targeted statutory fix that stabilizes the market by aligning legal timelines with actual insurance placement practices.
SB 69: Regulating Litigation Finance Through Broad Structural Reform
The Georgia Courts Access and Consumer Protection Act (SB 69) represents a more complex response to third-party litigation financing. These arrangements provide plaintiffs with funds during pending litigation in exchange for a contingent interest in any recovery.
Concerns surrounding SB 69 are well-founded. Over the past decade, venture capital and large out-of-state investors have aggressively entered the litigation funding market, targeting lower-value personal injury cases, particularly automobile accidents. Many consumers were unaware of the effective interest rates being charged, which sometimes exceeded 40% annually.
While litigation financing plays a legitimate role by helping plaintiffs cover basic living expenses, it also reduces the leverage insurers gain by slowing the litigation process. SB 69 addresses this by imposing registration requirements, disclosure obligations, and restrictions on funder involvement in litigation decisions. However, these measures significantly increase compliance costs, potentially pushing smaller, ethical funding companies out of the market.
The effects of SB 69 will become evident next year. Advances for smaller cases, such as modest automobile accident claims, will likely continue, but funding for larger, more complex matters will become rarer due to the need for in-depth evaluation and greater risk. Furthermore, the law does not cap interest rates, meaning that rates may remain high or even increase, particularly as more ethical players exit the market due to compliance costs.
Historically, litigation funding operated differently, with financial support flowing through professional relationships between attorneys rather than through scaled commercial enterprises. This earlier model benefited consumers with reasonable rates, but it has since evolved into a venture-backed operation emphasizing volume and aggressive marketing.
Critics argue that the law’s structure is flawed. Instead of establishing a clear cap on permissible rates, the layered regulatory requirements may inadvertently push small players out of the market while doing little to regulate the actual rates charged to consumers.
As Georgia continues to refine its approach to consumer protection and tort reform, these statutes serve as a reminder that effective regulation often hinges on precision. Where risk arises from unrealistic timelines, modest statutory adjustments can yield meaningful results. In more complex markets, however, over-engineered solutions may limit access to only those larger players capable of bearing the regulatory burden, ultimately failing to protect the very consumers the reforms aim to assist.
Atlanta lawyer Matthew Stoddard, who transitioned from defending corporations in injury and wrongful death litigation to representing plaintiffs since 2011, is admitted to the Bar in Georgia and North Carolina.
Topics
Georgia
