Recommendations on Georgia’s Rising Premiums, Loss Ratios

Homeowners’ insurance premium in Georgia costs less than in other states. Neither affordability nor availability have been major concerns in a state with hundreds of licensed insurers. But things changed in 2023-2024 when Hurricanes Idalia, Helene, and Milton struck the state. Damage and destruction from the powerful storms caused insurance companies to experience heavy financial losses, which led insurance rates to rise sharply. Rates rose by 30.9 percent from 2019 to 2024 and by 8.1 percent in 2024 alone.

Increases in insurance cost prompted the state legislature to take action with bills and the proposed formation of study committees to examine insurance and reinsurance company practices. This Real Solutions piece contributes to the conversation with insights and ideas on how Georgia’s insurance buyers can secure insurance cover in a competitive private market, with choice and protections for both buyers and providers.

Georgia by the Numbers

In Georgia, the average premium for a homeowners’ insurance policy covering a single-family home valued at $300,000 is $1,954. This compares favorably with the national average of $2,341.

With a median family income of $74,644, Georgians pay 2.6 percent of their income for homeowners’ insurance. A rule of thumb holds that homeowners’ insurance should not exceed 0.5 percent of a home’s value. With a median home value of $272,900, it will take more work to reach that threshold.

Loss of Life, Loss of Property

The three hurricanes that hit the area in 2023 and 2024 were lethal as well as destructive. Helene tragically took the lives of 33 Georgians. The storm track, especially for Helene, traversed the entire state from Valdosta to Augusta, and the damage to Georgia farms alone totaled approximately $6 billion. Billions more in losses from Hurricanes Idalia and Milton puts these two years among the most punishing for insurance buyers and providers.

Impact on Insurance Companies

Damage from these hurricanes dented insurers’ financial results. The following table shows the loss ratio for the aggregate Georgia homeowners’ insurance market. The loss ratio is a measure of insurers’ underwriting performance calculated by dividing the sum of losses by premium. It does not include insurance company expenses, which are approximately 30 percent of premium. Adding 30 percent to the 2024 loss ratio of 112.4 percent puts the combined ratio at 142 percent. This means that in 2024, insurers paid out $1.42 in homeowners’ losses for every $1 they took in as premium. The only recent year when homeowners’ insurance did not operate at a loss was 2021, when the combined ratio was approximately 92.1 percent (with a 62.1 percent loss ratio and an implied 30 percent expense ratio).

Georgia Homeowners’ Insurance Direct Incurred Loss Ratio (DILR)

The Georgia homeowners’ insurance market is somewhat concentrated. The state’s top 10 insurers are diversified national companies with operations in most states. The following table shows Georgia’s top 10 homeowners’ writers, which have 80.6 percent market share.

Georgia Homeowners Insurance Direct Premium Written, 2024

(In millions unless otherwise specified)

Two insurers operating primarily in Georgia are Georgia Farm Bureau Insurance Company (GFB) and Southern Trust Insurance. Both reported poor results in 2024. GFB reported a 2024 DILR of 152.8 percent for its homeowners business. Southern Trust reported a direct DILR of 203.1 percent. The overall industry reported a DILR of 112.0 percent. Adding 30 percentage points for expenses takes the 2024 result deep into unprofitable territory. The first quarter of 2025 looked better GFB, which reported an $18 million underwriting gain. Southern Trust reported a $1.1 million underwriting loss in the first quarter of this year.

Role of Reinsurance

Reinsurance is a financial tool for insurance companies to spread their risk. To do this, they retain risk up to a certain level and purchase excess of loss (XOL) reinsurance from the global reinsurance market for coverage above the amount they retain. The previous table shows that, with the exception of GFB, the top 10 Georgia homeowner insurers are national companies. Unlike single-state, Georgia-focused insurers, large national insurers can spread their risk with geographical diversification. Small insurance companies that lack the ability to diversify geographically must buy ample reinsurance to protect their balance sheet. For example, Macon-based Southern Trust Insurance, which wrote $9.3 million in homeowners’ insurance premium in 2024, has counterparty relationships with 16 reinsurers in the United States, Switzerland, Bermuda, Germany, Canada, the United Kingdom, Sweden, and Jordan.

Reinsurance transactions can be complex. For example, reinsurer American Agricultural Insurance Company (AAIC) owns GFB, which ceded $95 million to AAIC in 2024. AAIC in turn ceded (or, to use a term of art, “retroceded”) business back to Southern Casualty Holding Company, which is owned by several insurers in the Farm Bureau family. The intricate arrangement between AAIC and individual state farm bureau mutual insurers should be a source of strength given AAIC’s pooling capability, to which hundreds of insurers cede. However, some farm bureau mutual insurers are experiencing financial pain. Texas Farm Bureau was downgraded following large losses in 2022 and 2023. Farm Bureau Insurance of Arkansas reported poor results in 2023 prior to its 2025 acquisition by Southern Farm Bureau.

Georgia Farm Bureau Insurance Combined Ratio

Scandal at Last Chance Georgia Insurer

When insurance buyers are unable to obtain insurance in the private market because they have history of numerous losses or because their property is in a catastrophe-prone area, they may obtain insurance from the “insurer of last resort,” such as the Fair Access to Insurance Requirements (FAIR) Plan. Most states’ FAIR plans function well. Georgia’s FAIR plan is the Georgia Underwriting Association (GUA). Like FAIR plans in other states, the GUA ensures that homeowners have access to insurance. In 2018, it was discovered that former GUA General Manager of Operations Jim Beck committed fraud. Beck won election as Georgia insurance commissioner in 2018 but was suspended with pay in May 2019 following his indictment. He did not resign from the position; rather, he was automatically removed after being convicted. The U.S. Attorney’s office found that Beck had stolen over $2.5 million from the GUA between February 2013 and August 2018.

Recommendations

Incorporate best practices in the Georgia study committee on insurance. Regardless of whether HR 659, introduced in April 2025, will pass and create a study committee on insurance, the Georgia legislature should explore other states’ best practices to make homeowners’ insurance available and affordable. For example, FORTIFIED programs in Alabama and Louisiana and Florida’s extensive use of reinsurance can serve as models for Georgia’s efforts to benefit homeowners while strengthening insurers’ solvency.

Expand the state’s guaranty association to cover property insurance. Most states have guaranty funds to enable claims payments from impaired insurers. The Georgia Life & Health Insurance Guaranty Association is only involved in life, health, and workers’ compensation insurance. Because Georgia is catastrophe-exposed, there is potential for impairments at small, thinly capitalized property and casualty insurers lacking diversification.

Expand the state’s FORTIFIED program. Greater utilization of the Georgia FORTIFIED program is also recommended. To date, there is scanty information about the program in Georgia. The GUA, which administers the program, mentions that it exists in Georgia and “specifies insurance discounts for FORTIFIED construction.” However, a link to “more information” on the GUA website leads to a nonexistent webpage, and no information on the program appears on the Insurance and Safety Fire Commission website. In contrast, Alabama’s widely publicized program, Strengthen Alabama Homes, has already led to the greater fortification of over 50,000 homes. In 2024, the Georgia Legislature passed HB 279, which provides credits and insurance premium rate reduction to homeowners who take measures to make their homes more resistant to tornado or hurricane damage.

Increase GFB’s use of non-affiliated reinsurance. As previously mentioned, GFB’s main reinsurance relationship is with AAIC. After GFB reinsured the $95 million to AAIC in 2024, AAIC ceded $306 million to Southern Casualty Holding Company. Southern Casualty then reinsured $386 million to AAIC. Although reinsuring to affiliated companies may boost the capital of cedents, relying only on affiliated counterparty reinsurance relationships may concentrate risk. Insurers with catastrophe exposure often cede to numerous unaffiliated reinsurers to achieve greater risk spread.

Strengthen audit function. Insurance companies are highly complex. Complicated counterparty relationships with affiliated and unaffiliated entities may strengthen insurance company balance sheets, but because there are large amounts of money involved, insurance companies are often attractive targets for fraudsters. In addition to the Beck case, former Georgia Insurance Commissioner John Oxendine pleaded guilty to health insurance fraud in 2024. With two such high-level black eyes, it stands to reason that the Georgia Insurance Department’s Criminal Investigations Division should do a more thorough job of identifying and investigating potential insurance fraud.

Georgia legislators should be commended for taking the initiative to explore ways to make the state’s insurance market stronger with competitive prices, quality products, and adequately capitalized insurers. We hope this Real Solutions piece might contribute to that effort.

This article first appeared in R Street Institute’s blog. R Street is a think tank that examines solving public policy challenges through free markets and limited government. Jerry Theodorou is R Street’s policy director for finance, insurance and trade.

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