Insurance Companies Are Gutting Rights to Maximize Profits

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Across the Southeast, the same tired refrain echoes through legislative halls: “Lawsuits are out of control. Jury verdicts are bankrupting businesses. We need tort reform to keep insurance affordable.”

As a small business owner, I know what it’s like to pay insurance premiums. Last year, my businesses paid over $100,000 in insurance premiums. But unlike many small business owners, my job requires me to interact with the civil justice system daily, representing victims, consumers, and policyholders across South Carolina.

During the tort reform debate of 2025, it was clear that our legislators had zero data or real information to justify their proposed tort reforms. Our own insurance commissioner confessed that he was unable to give any guidance on if proposed reforms would lower premiums. He had no data.

I was disturbed by this, so during this legislative offseason I set out to see where the truth lies. My research took me across the Southeast reviewing tort systems, insurance data, and speaking with consumer advocates.

What I learned: the insurance industry is thriving.

Insurance is Profitable, Not in Crisis

Data from The National Association of Insurance Commissioners (NAIC) shows that in South Carolina, insurance companies are extremely profitable. They break even or better in underwriting, meaning the premiums they take in versus their overhead and claims paid are about equal.

So how are they so profitable? It’s called the “float,” and they don’t want you to know about it. The real jackpot is investment income. Premiums paid by small businesses and citizens are held by insurers and invested in the stock market for months or years before claims are paid, generating billions in profits.

This means that the longer they hold your money with no payment, the richer they become, incentivizing extreme claim denial and delay. In South Carolina, Allstate closed almost 50 percent of its covered claims with zero payment, and it was approximately 46 percent for Progressive. These denials are not because of frivolous claims; it's a corporate scheme to deny legitimate claims to make money.

In South Carolina, NAIC data from 2004-2024 shows that homeowner’s insurance companies made over $180 in profit from investments for every $1 dollar they lost from claims. Automobile insurance companies make over $400 in investment profit for every $1 dollar they lose from claims.

They Keep Coming Back for More

During my research tour across the Southeast, I saw the same script play out:

1. Insurance companies claim lawsuits are driving up rates, hurting businesses.

2. Legislatures pass “tort reforms” that erode the constitutional right to a jury trial and upend civil justice laws.

3. Two/three years later, insurers return for another round of so-called “reform” with the exact same message.

If lawsuits were the real problem, why do states like Texas, Florida, and Louisiana — after decades passing numerous tort reform bills — still have some of the highest insurance rates in the nation? Because this crusade isn’t about lawsuits at all.

It’s about control. It’s about eliminating your ability to hold big corporations and insurance accountable when they hurt you or your business.

What is the Solution?

It is clear from the data that what we need is insurance reform, not tort reform. Here are three solutions that would actually lower your premiums:

1. No Rate Hikes for Non-Fault Claims – Ban insurers from raising your rates if you file a claim through no fault of you or your business. You should not be punished for filing a legitimate claim over an event that was not your fault.

2. Full Transparency in Profits – Require insurers to disclose investment income on premiums, not just underwriting results. Let the public see where the money goes and truly how profitable they are. “Show us the float!”

3. Regulate the Industry – The government mandates that we all purchase insurance in many areas. If the government forces us to buy a product, then we deserve to know we aren’t being ripped off. Going forward, if big insurance wants to jack up rates, they need to prove why.

This fight isn’t about lawsuits and lawyers. It’s about you. Your business. Your family. Your rights. So, the next time a politician screams “tort reform,” ask: Who really benefits? Because it isn’t you.

Christopher Pracht is a small business owner and attorney from Greenville, South Carolina.