Viewpoint: Georgia Reforms May Reshape Markets in Unintended Ways

Georgia lawmakers enacted two consumer-focused statutes that have gone into effect with the New Year that acknowledge and address one simple, but critical fact of life: Time is money.

Approved by legislators in May 2025, Georgia Act 277 makes a targeted adjustment to homeowners insurance nonrenewals, while SB 69 (signed into law by Governor Brian Kemp in April 2025) undertakes a sweeping overhaul of litigation finance. Together, they illustrate how the design of regulation can either reduce risk or reshape markets in unintended ways.

Act 277: Fixing a Structural Timing Problem in Insurance

Act 277 extends the notice period for homeowners insurance nonrenewals from 30 days to 60, addressing a recurring structural problem in the insurance market: policyholders were often given too little time to secure replacement coverage before facing serious downstream consequences.

In practice, replacing homeowners insurance is rarely instantaneous. Most consumers rely on brokers, who must gather financial documentation, verify credit and income information, and shop coverage across multiple carriers. Even when the process moves efficiently, it often takes several weeks. A 30-day nonrenewal window frequently placed homeowners on an artificial collision course with both insurers and lenders, leaving little margin for delay.

The consequences of that compressed timeline extended beyond inconvenience. Once coverage lapsed, borrowers could be in technical default under standard mortgage covenants requiring continuous insurance. Many homeowners escrow insurance payments through their lenders, meaning a lapse can trigger force-placed coverage at substantially higher cost, servicing disputes, or both. If a loss occurs during that gap, questions of responsibility can quickly turn into litigation unrelated to fault and driven largely by timing.

By extending the notice period, Act 277 reduces the risk of coverage gaps that trigger cascading financial and legal consequences. From a liability standpoint, the change lowers the likelihood of post-loss disputes among homeowners, insurers, lenders, and additional insureds when a casualty occurs during a lapse created by nonrenewal timing rather than consumer neglect. Notably, the adjustment imposes minimal operational burden on insurers, making it a targeted statutory fix that stabilizes the market by aligning legal timelines with how insurance placement actually works.

SB 69: Regulating Litigation Finance Through Broad Structural Reform

The Georgia Courts Access and Consumer Protection Act (SB 69), enacted as part of the governor’s broader tort reform efforts, attempts to address a far more complex issue: third-party litigation financing. These arrangements provide plaintiffs with funds during pending litigation in exchange for a contingent interest in any recovery.

The concerns driving SB 69 are well-founded. Over the past decade, venture capital and large out-of-state investors entered the litigation funding market and scaled it aggressively. High-volume business models targeted lower-value personal injury cases, particularly automobile accidents, and marketed advances to consumers who often did not fully understand the effective interest rates being charged. Then, in 2018, the Georgia Supreme Court held that litigation financing falls outside Georgia’s Industrial Loan Act (O.C.G.A.§ 7-3-1 et seq.) and Georgia’s Payday Lending Act (O.C.G.A § 16-17-1 et seq.) because the transactions are structured as contingent purchases rather than loans. See Ruth v. Cherokee Funding, LLC, 304 Ga. 574 (2018).

The Supreme Court correctly interpreted the statutes; the court’s job is not to legislate. What the ruling meant, though, is that there were no limits on the amount of interest that could be charged for litigation financing transactions. Some consumers were seeing rates exceeding 40% annually.

At the same time, litigation financing played a legitimate role. By helping plaintiffs cover basic living expenses, funding reduced the leverage insurers gained by successfully slowing the litigation process. In short, litigation financing allowed injured parties of limited means to resolve their claims for fair value and not be forced into accepting lesser amounts because the out-of-work victim otherwise needed to eat and live.

SB 69 responds by imposing registration requirements, disclosure obligations, and restrictions on funder involvement in litigation decisions. While the law may succeed in pushing the most aggressive actors out of the market, it has also significantly increased compliance costs. Many smaller (and ethical) funding companies (often local to Georgia) that were charging interest closer to 20% are likely to exit the market due to the added regulatory burden.

The effects will become visible next year. Advances for smaller cases, such as modest automobile accident claims, will continue to be common and those loans will be pushed in a model similar to pharmaceutical sales, i.e., aggressive advertising aimed at personal injury lawyers and television commercials aimed at injured victims of limited means. Funding larger, more complex matters (product liability, industrial accidents, and human trafficking cases) will become even rarer because such funding requires in-depth evaluation of merit by the funding company and creates greater risk.

As for the rates that the litigation financing companies can charge consumers, those rates will likely stay high or go up as the law does not cap interest rates. Further, those more-ethical players in the market (the local and Georgia-based ones) will likely exit the market altogether based on compliance and regulatory cost.

Earlier versions of litigation funding operated very differently. In the 1990s and early 2000s, financial support often flowed through professional relationships between attorneys who evaluated the merits of a case rather than through scaled commercial enterprises. That business was a win for consumers as the rates were very reasonable. But that model gave way to venture-backed operations emphasizing volume and marketing, creating many of the abuses SB 69 now seeks to address.

Critics of the law argue that its structure is the central issue. Rather than establishing a clear cap on permissible rates, a targeted approach that could have eliminated predatory pricing while preserving market access, the layered regulatory requirements that now exist increase the risk of technical noncompliance, unnecessarily push small players out of the market, and do very little to regulate the actual rate that consumers can be charged.

As Georgia continues to refine its approach to consumer protection and tort reform, these statutes offer a reminder that effective regulation often depends on precision. Where risk arises from unrealistic timelines, modest statutory adjustments can produce meaningful results. Where markets are more complex, over-engineered solutions may limit access to only those larger market players who can bear the regulatory cost while doing little for the very consumers that the reform is meant to protect.

Atlanta lawyer Matthew Stoddard, who once defended corporations in injury and wrongful death litigation, has been a plaintiffs’ attorney since 2011, admitted to the Bar in Georgia and North Carolina.

Topics Georgia