Category Archives: Legal Environment

Auto Insurance, Insurers and the Economy, Legal Environment, Market Conditions

Even With Recent Rises, Auto Insurance Is More Affordable Than During Most of Century to Date

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You read that right. As a percentage of median household income, personal auto insurance premiums nationally were more affordable in 2022 (the most recent data available) than they have been since the beginning of this century.

And even the premium increases of the past two years are only expected to bring affordability back into the 2000 range, according to the Insurance Research Council (IRC).

A new IRC report – Auto Insurance Affordability: Countrywide Trends and State Comparisons – looks at the average auto insurance expenditure as a percent of median income. The measure ranges from a low of 0.93 percent in North Dakota (the most affordable state for auto insurance) to a high of 2.67 percent in Louisiana (the least affordable).

The pain is real

This is not to downplay the pain being experienced by consumers – particularly those in areas where premium rates have been rising while household income has been flat to lower.  It’s just to provide perspective as to the diverse factors that come into play when discussing insurance affordability.

Between 2000 and 2022, median household income grew somewhat faster than auto insurance expenditures, causing the affordability index to decline from 1.64 percent in 2000 to 1.51 percent in 2022. In other words, auto insurance was somewhat more affordable in 2022 than in 2000.

“With the recent increases in insurance costs, affordability is projected to deteriorate in 2023 and 2024,” said Dale Porfilio, FCAS, MAAA, president of the IRC and chief insurance officer at Triple-I. “The affordability index is projected to increase to approximately 1.6 percent in 2023 and 1.7 percent in 2024, a significant increase from the low in 2021 but still below the peak of 1.9 percent in 2003.”

In other words, we’ve been here before; and, if risks and costs can be contained, so can premium growth in the long term.

Cost factors vary by state

Auto insurance affordability is largely determined by the key underlying cost drivers in each state. They include:

  • Accident frequency
  • Repair costs
  • Claim severity
  • Tendency to file injury claims
  • Injury claim severity
  • Expense index
  • Uninsured and underinsured motorists
  • Claim litigation.

These factors vary widely by state, and the IRC report looks at the profiles of each state to arrive at its affordability index.

Reducing risk and costs is key

Porfilio noted that “while state-level data cannot directly address affordability issues among traditionally underserved populations, collaborative efforts to reduce these key cost drivers can improve affordability for all consumers.”

Continued replacement-cost inflation is likely to maintain upward pressure on premium rates. Tariffs could exacerbate that trend, as well as hurting household income in areas dependent on industries likely to be affected by them.

At the same time, some states are working hard to ameliorate other factors hurting affordability.  Florida, for example, was the second least affordable state for auto insurance in 2022; however, the state has made recent progress to reduce legal system abuse, a major contributor to claims costs in the Sunshine State. In 2022 and 2023, Florida passed several key reforms that have led to significant decreases in lawsuits. As a result, insurers have been writing more business in the state after a multi-year exodus. This increased competition puts downward pressure on rates, which should be reflected in the IRC’s next affordability study.

Learn More:

IRC Report: Personal Auto Insurance State Regulation Systems

IRC Report: U.S. Consumers See Link Between Attorney Involvement in Claims and Higher Auto Insurance Costs

Florida Reforms Bear Fruit as Premium Rates Stabilize 

What Florida’s Misguided Investigation Means for Georgia Tort Reform

Florida Bills Would Reverse Progress on Costly Legal System Abuse

Inflation Continues to Drive Up Consumers’ Insurance Costs

Improved Commercial Auto Underwriting Profitability Expected After Years of Struggle

Louisiana Is Least Affordable State for Personal Auto Coverage Across the South and U.S.

Georgia Is Among the Least Affordable States for Auto Insurance

Report: No-Fault Reforms Improved Michigan’s Personal Auto Insurance Affordability

Auto Insurers’ Performance Improves, But Don’t Expect Rates to Flatten Soon

Legal Environment

What Florida’s Misguided Investigation Means
for Georgia Tort Reform

In an eblast to members and other stakeholders, Triple-I highlighted the growing need for tort reform in Georgia and the expanding movement in Florida threatening to undo the positive 2022 and 2023 reforms that have stabilized the Sunshine State’s insurance market and driven down prices for consumers and business owners.

March 24 marks two years since Florida Gov. Ron DeSantis signed HB 837, the second of two impactful tort reform bills tackling Florida’s lawsuit crisis that pushed the insurance market to the edge. According to National Association of Insurance Commissioners data, Florida accounted for just over 8% of U.S. homeowners insurance claims, but more than 76% of U.S. property claim lawsuits in 2019 before critical reforms were enacted. All of which is proof of a system in disarray.

A recent commentary written by Jerry Theodorou, director of the Finance, Insurance and Trade Policy Program at R Street Institute, highlighted vast improvements in Florida’s property insurance market due to legislative reform:

  •  Lawsuit filings dropped by 40% year-over-year.
  • Average home insurance premiums have decreased 5.6%.
  • 11 new property insurers entered the market.

Despite these clear signs of progress, a misguided Florida House investigation, which began last week, has been fueling misleading narratives about tort reform, just as Georgia lawmakers are considering critical legal system reforms in the Peach State.

Critics in Florida claim insurers illegally diverted funds to managing general agents and affiliates while dismissing the well-documented role of lawsuit abuse in driving up costs. This was based on a draft report about the financial operations of Florida insurers that the Florida Office of Insurance Regulation chose not to distribute because it was misleading.  

This same rhetoric is now infiltrating the Georgia Capitol in Atlanta, where some are arguing that Florida lawmakers were duped into passing reforms in 2022 and 2023. In truth, Florida’s risk crisis stems from rampant legal system abuse, a factor that has increased insurance premiums for everyone.

Even with the distorted narrative trial lawyers are inflicting on Florida lawmakers, Gov. DeSantis stated he would not support any legislation that would increase lawsuits against insurers. A recent opinion piece written by Florida insurance agent Allen McGinniss further highlights the reality of the Florida insurance market, explaining that the false narrative —that the insurance industry, not lawsuit abuse, is driving high costs for consumers “is not just inaccurate — it’s reckless.”

In Georgia, the negative rhetoric coming from neighboring Florida must not delay progress that has already been made in the 2025 General Assembly to put an end to legal system abuse in the Peach State.

Tort reform is essential to curbing lawsuit abuse, stabilizing markets, and protecting businesses and consumers in Georgia. Lawmakers cannot fall for the same tactics the trial bar in Florida designed to stall much-needed legal system reforms for many years. Following passage by the Georgia Senate, the House must act now to pass these crucial tort reform bills and send them to Georgia Gov. Brian Kemp’s desk to sign into law.

Both Florida and Georgia are at a pivotal moment in civil justice reform. Legal system abuse has generated increased insurance costs in both states, fueling social inflation and placing a heavier financial burden on families and business owners. The stakes are too high to let trial lawyers and bad actors manipulate legislators into reversing progress or blocking much-needed reforms.

Florida lawmakers must stay the course to ensure the successful legal reforms over the past few years remain intact, while Georgia legislators must seize this opportunity to pass meaningful legal system changes. These actions are essential to decreasing lawsuit abuse, stabilizing insurance markets, and protecting consumers and businesses from rising costs.

Go deeper:

  • For more in-depth analysis on legal system abuse and social inflation, visit Triple-I’s knowledge hub and StopLegalSystemAbuse.org microsite.
  • Discover more about the impact of legal system abuse in Florida and Georgia by reading Triple-I’s latest Florida and Georgia Issues Briefs.
Legal Environment

Florida Bills Would Reverse Progress on Costly Legal System Abuse

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Recent improvement in Florida’s insurance market – fostered by legislation targeting legal system abuse – is threatened by several bills proposed in the state’s 2025 legislative session.

Florida’s property insurance market has stabilized thanks to reforms introduced in 2022 and 2023 aimed at reducing excessive litigation and inflated claims. As a result of these reforms, the number of insurers writing business in the state has rebounded after a multi-year exodus. This competition has allowed policyholders to leave Citizens Property Insurance Corp. – the state-run insurer of last resort – to obtain coverage at rates that were previously unavailable.

According to the Florida Chamber of Commerce, key bills threatening policyholders’ savings include:

  • H.B. 451/SB 554, which would reintroduce litigation incentives;
  • H.B. 947/SB 1520, which would eliminate transparency requirements for medical costs in court;
  • H.B. 1437/SB 1840, which would reinstate attorney fee awards in auto insurance cases; and
  • H.B. 1551/SB 426, which would bring back attorney fees for property insurance lawsuits that were eliminated in 2022.

Before recent reforms, Florida homeowners paid premiums up to three times the national average. Since the reforms, 60 percent of the top 10 national insurers writing homeowners insurance in Florida have expanded their business over the past year, and 40 percent of all insurers operating in the state filed for rate decreases in 2024, according to Florida Insurance Commissioner Michael Yaworksy.

As Triple-I CEO Sean Kevelighan recently put it, “Citizens of the Sunshine State are now clearly seeing the benefits of a more stable and affordable insurance marketplace.”

The new legislation would reduce or even reverse that progress.

Learn More:

Florida Reforms Bear Fruit as Premium Rates Stabilize 

Florida’s Progress in Legal Reform: A Model for 2025

How Georgia Might Learn From Florida Reforms

Resilience Investments Paid Off in Florida During Hurricane Milton

Florida Homeowners Premium Growth Slows as Reforms Take Hold, Inflation Cools

Louisiana’s Insurance Woes Worsen as Florida Works to Fix Its Problems

Auto Insurance, Coastal Property, Homeowners Insurance, Insurers and the Economy, Legal Environment

Florida Reforms
Bear Fruit as Premium Rates Stabilize 

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Florida’s legislative reforms to address claim fraud and legal system abuse are stabilizing the state’s property/casualty insurance market, according to the latest Triple-I Issues Brief.  

Claims-related litigation has significantly declined over the past two years, and premium averages are nearly flat, with several insurers requesting rate decreases from the state’s insurance regulator.  In addition, the brief says, the number of insurers writing business in the state has rebounded after a multi-year exodus. This competition from the private market has allowed policyholders to leave Citizens Property Insurance Corp. – the state-run insurer of last resort – to obtain coverage at previously unavailable rates from a much healthier private market. 

According to the state’s Office of Insurance Regulation (OIR), Florida in 2022 accounted for nearly 71 percent of the nation’s homeowners claim-related litigation, despite representing only 15 percent of homeowners insurance claims. The same year – before Hurricane Ian made landfall in Florida – six insurers in the state declared insolvency, primarily due to economic pressures from legal system abuse. Based on insured losses, Ian became the second-most costly U.S. hurricane on record, due in large part to extraordinary litigation costs for disputed claims. 

The Legislature responded to the growing crisis by passing several pieces of insurance reform that, among other things, eliminated one-way attorney fees and assignment of benefits (AOB) for property insurance claims and prohibited misleading legal service ads and the misuse of consumer health information for legal services. 

Premium rate growth slowing 

The impact of the 2022 and 2023 reforms can be seen in premium rate changes, particularly with respect to homeowners insurance. Homeowners rates in Florida grew at a much slower rate in 2024, even as rate growth remained strong nationally. Growth in personal auto insurance premium rates in Florida has slowed since the repeal of AOB and one-way attorney fees, but the trend also is consistent with nationwide experience. 

“There are a lot of factors involved in insurance rates, and Florida’s property and auto markets are challenging,” Florida Governor Ron DeSantis said in February, “but…data suggests that, in 2024, Florida had the lowest average homeowners’ premium increases in the nation, and the overall market has stabilized, with 11 new companies having entered the market over the past two years.” 

Among the top 10 national insurers writing homeowners insurance in Florida, 60 percent have expanded their business over the past year, and 40 percent of all insurers operating in the state filed for rate decreases in 2024, according to Florida Insurance Commissioner Michael Yaworksy. 

The cost of reinsurance also continues to decrease for Florida carriers. 

“In 2024, most companies paid less for reinsurance than they did in 2023,” according to the OIR website. “The average risk-adjusted cost for 2024 was -0.7 percent, a large reduction from last year’s change of 27 percent increase from the prior year.” 

Reinsurance costs are factored into premium rates, so this is another reason Florida now has the lowest average rate filings in the United States in 2024, according to S&P Global Marketplace. 

Learn More: 

Florida’s Progress in Legal Reform: A Model for 2025 

How Georgia Might Learn From Florida Reforms 

Resilience Investments Paid Off in Florida During Hurricane Milton 

Florida Homeowners Premium Growth Slows as Reforms Take Hold, Inflation Cools 

Legal Environment

Georgia Targets
Legal System Abuse

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By Lewis Nibbelin, Contributing Writer, Triple-I

The Georgia Senate recently approved legislation aimed at curbing the state’s soaring litigation. Backed by Georgia Gov. Brian Kemp, Senate Bill 68 is designed to facilitate more equitable courtroom outcomes and stabilize insurance rates.

Among other provisions, the bill includes a cap on pain and suffering evidence that would reduce premises liability lawsuits, or those against owners for injuries and/or criminal conduct that occurred on their property. It also would restrict “phantom damages,” meaning plaintiffs could seek damages only in the amount actually paid for medical bills, rather than an inflated amount determined by a healthcare provider’s list prices.

Both practices have generated nuclear verdicts (awards of $10 million or more) in Georgia, contributing to the fourth-most nuclear verdicts in personal injury litigation per capita of any state from 2013 to 2022.

Another bill – SB 69 – targets third-party litigation funding, in which investors anonymously finance litigation and often delay prompt settlement in exchange for a share of larger damage awards, thereby driving up claims costs. If enacted, the bill would limit their influence over legal decisions and require third parties to register with the Department of Banking and Finance, effectively banning foreign adversaries from funding litigation.

Much of the legislation is based on a report from the office of Georgia Insurance and Safety Fire Commissioner John F. King, which revealed a steady increase in liability claims frequency and identified growing legal involvement in claims as a key driver of insurance rates.

“Georgia’s legal climate amounts to a hidden tax on families and small businesses, driving up costs and threatening our long-term future,” King said in a recent press conference, explaining that tort reform can “level the playing field in our courtrooms and help ensure Georgia’s long-term prosperity and security.”

Economic impact on Georgia

Georgia loses over 137,000 jobs annually due to excessive litigation, which further imposes an estimated $1,415 “tort tax” on each resident per year, earning the state a recurring spot on the American Tort Reform Foundation’s annual list of “judicial hellholes.” With litigation for personal auto claims at a rate more than twice that of the median state, Georgia also ranks among the least affordable states for personal auto insurance, according to research by the Insurance Research Council (IRC) – an affiliate of The Institutes, like Triple-I.

To bolster stakeholder education on the economic impacts of legal system abuse, Triple-I recently expanded its comprehensive awareness campaign in Georgia. The campaign now encompasses multiple brick-and-mortar interstate billboards in Downtown Atlanta, along with digital bus shelter billboards across the Metro Atlanta area. All billboards promote Triple-I’s microsite encouraging consumer support for reform in the state.

Though hundreds – including doctors and business owners – have galvanized behind the reforms, neither bill is without controversy. Opponents argue such legislation may not improve insurance rates and could overcorrect to favor insurance companies at the expense of policyholders.

Following reforms in 2022 and 2023, however, Florida welcomed flat or decreased insurance rates last year, as the state’s insurance market began to recover from its former status as the “poster child” for legal system abuse. Substantial rate reductions have continued into 2025, particularly for three major auto insurance carriers, according to Florida Gov. Ron Desantis’ announcement earlier this month.

While the specific policy levers may differ, Florida’s success models the potential benefits of similar legislation in other areas. Certainly, understanding and mitigating these trends is crucial to restoring Georgia’s economy.

Learn More:

New Triple-I Issue Brief Puts the Spotlight on Georgia’s Insurance Affordability Crisis

How Georgia Might Learn From Florida Reforms

Triple-I launches Campaign to Highlight Challenges to Insurance Affordability in Georgia

Georgia Is Among the Least Affordable States for Auto Insurance

Insurance News, Legal Environment

Florida’s Progress
in Legal Reform:
A Model for 2025

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Florida’s legal system reforms, aimed at curbing frivolous lawsuits and unfair liability divisions, are showing early signs of success, according to a recent study from the U.S. Chamber of Commerce Institute for Legal Reform.

The historic reform legislation passed in 2022 and 2023 has led to insurance carriers expanding their business in Florida, and homeowner insurance rates are either stabilizing or decreasing.

Key reforms passed by state lawmakers include:

  • Florida Senate Bill 2A (2022): Eliminated one-way attorney fees and assignment of benefits for property insurance claims.
  • Florida HB 1205 (2023): Prohibits misleading legal service ads and the misuse of consumer health information for legal services.
  • Florida Supreme Court (2024): Requires discovery to be proportional to case needs.
  • Florida HB 837 (2023):
    • Adopts modified comparative fault.
    • Limits plaintiff recovery over 50% fault.
    • Protects multi-family owners from third-party crime liability.
    • Restricts bad faith insurance claims.
    • Limits medical damages to actual payments with required disclosures.

Florida reforms in 2022 have also addressed the issue of fraudulent assignment of benefits (AOB) claims. A recent court ruling upheld Senate Bill 2A, confirming that a “direction to pay” (DTP) is not an AOB and third parties lack standing to sue insurers without a valid AOB.

Despite facing opposition from the well-funded billboard trial lobby, the reforms have led to a reduction in property insurance lawsuits and stabilized rates. However, the problem of opportunistic trial attorneys driving up frivolous lawsuits for profit persists, emphasizing the need for insurers and businesses to adapt their risk management strategies in 2025.

Looking ahead, Florida lawmakers in 2025 are expected to reintroduce a bill requiring more transparency for third-party litigation funding (TPLF) during the 2025 legislative session, according to the Florida Chamber of Commerce. This is seen as another crucial step in the reform of Florida’s legal system.

“Legislative reforms have vastly improved Florida’s property insurance market. Any efforts to roll back the reforms previously passed would have a negative impact on the market’s continued path toward stability,” said Mark Friedlander, Triple-I’s Florida-based director of corporate communications.

The reforms have led to a significant drop in property claims lawsuits, better loss ratios for insurers, a manageable hurricane season, billions in new capital, and a projected reduction in reinsurance prices for 2025 following flattened rates in 2024. These developments underscore the effectiveness of the reforms and the potential for further improvement in the insurance market.

For a deeper understanding of the implications of TPLF and the ongoing legislative efforts, we invite you to explore Triple-I’s comprehensive TPLF white paper and visit our legal system abuse knowledge hub. You can also check out our new StopLegalSystemAbuse.org microsite.

Auto Insurance, Homeowners Insurance, Legal Environment, Market Conditions

Louisiana Reforms: Progress, But More
Is Needed to Stem
Legal System Abuse

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Reforms put in place in 2024 are a positive move toward repairing Louisiana’s insurance market, which has long suffered from excessive claims litigation and attorney involvement that drive up costs and, ultimately, premium rates.

But more work is needed, Triple-I says in its latest Issues Brief.

Research by the Insurance Research Council (IRC) – like Triple-I, an affiliate of The Institutes – shows Louisiana to be among the least affordable states for both personal auto and homeowners insurance.

In 2022, the average annual personal auto premium expenditure per vehicle in Louisiana was $1,588, which is nearly 40 percent above the national average and nearly double that of the lowest-cost Southern state of North Carolina ($840), IRC said. Louisianans also pay significantly more for homeowners coverage than the rest of the nation, with an average annual expenditure of $2,178, representing 3.81 percent of the median household income in the state – 54 percent above the national average.

Louisiana’s low average personal income relative to the rest of the nation contributes to its personal auto insurance affordability challenges, which are exacerbated by its litigation environment.

Louisiana Insurance Commissioner Tim Temple has championed a series of legislative changes that he has said will encourage insurers to return to Louisiana, especially in hurricane-prone areas.

“There are fewer companies willing to write property insurance in Louisiana, and that’s a lot of what our legislation is designed to do,” Temple said. “To help promote Louisiana and change the marketplace so that companies feel like they are going to be treated fairly.”

In June 2024, Gov. Landry signed into law S.B. 355, which puts limitations on third-party litigation funding – a practice in which investors, with no stake in claims apart from potentially lucrative settlements, fund lawsuits aimed at entities perceived as having deep pockets. Third-party litigation funding drives up claims costs and delays settlements, which end up being passed along to consumers in the form of higher premiums.

This progress was undermined when Landry vetoed H.B. 423, which would have reformed the state’s “collateral source doctrine” that allows civil juries to have access to the “sticker price” of medical bills and the amount actually paid by the insurance company.

“In addition to creating more transparency and helping lower insurance rates, this bill would have brought more fairness and balance to our civil justice system,” said Lana Venable, director of Louisiana Lawsuit Abuse Watch in a statement regarding the veto. “Lawsuit abuse does not discriminate – everyone pays the price when the resulting costs are passed down to all of us.”

Continued reforms in 2025 will be necessary to help prevent legal system abuse and promote a more competitive insurance market that leads to greater affordability for consumers, Triple-I says in its brief.

Learn More:

Louisiana Is Least Affordable State for Personal Auto Coverage Across the South and U.S.

Despite Improvements, Louisiana Is Still Least Affordable State for Auto Insurance

Who’s Financing Legal System Abuse? Louisianans Need to Know

Louisiana Litigation Funding Reform Vetoed; AOB Ban, Insurer Incentive Boost Make It Into Law

Louisiana’s Insurance Woes Worsen as Florida Works to Fix Its Problems

Hurricanes Drive Louisiana Insured Losses, Insurer Insolvencies

Cyber Risk, Legal Environment, Technology

Crypto Theft Rulings
Use Simliar Logic
to COVID-Related
Business Interruption

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By Michael Menapace, Esq., Wiggin and Dana LLP

When I first wrote here about insurance coverage related to cryptocurrency theft, I discussed whether these digital assets were securities (as suggested by the SEC) or property (as suggested by the IRS) and how that might impact insurance coverage under a typical homeowners policy. 

I also discussed whether the full policy limits for generic property were available for the theft of the assets or a policy sublimit for money would apply. 

At that time, courts had provided little guidance on the issue, and few situations were analogous.  In recent years, however, guidance has emerged, including from a line of cases that would not appear to have much relevance at first glance. 

Wrestling over “physical” loss

Nearly every appellate court in the country has wrestled with the issue of whether economic losses experienced by businesses as a result of the COVID-19 pandemic were covered by their commercial property insurance policies.  A commercial property policy typically covers the “physical” loss of or damages to property.  Insurers uniformly denied those business interruption claims and thousands of businesses sued.  Courts consistently rejected the businesses’ claims for coverage because the COVID-19 virus does not change the structure of the insured property, and purely economic losses are not “physical” loss or damage. 

Similar to the commercial property insurance policies at issue in the COVID-19 claims, a typical homeowners policy covers the direct physical loss of covered personal property.

In 2021, Ali Sedaghatpour had approximately $170,000 of his cryptocurrency stolen and made a claim under his homeowners insurance policy.  The insurer paid him the $500 limit for the theft of electronic funds, but denied coverage for the remainder of the loss.  The homeowner sued and the federal district court for the East District of Virginia ruled in favor of the insurer.  Recently, the United States Court of Appeals for the Fourth Circuit affirmed the decision in favor of the insurer.  The case was titled Sedaghatpour v. Lemonade Insurance Co. (Case No. 23-1237). 

The court ruled that the digital theft of the homeowners’ currency did not amount to direct “physical” loss and the insurer owed the homeowner nothing more than the $500 it had already paid.  The appellate court did not disturb other findings by the trial court – including the lower court’s citation to dictionary definitions of cryptocurrency, which state that cryptocurrency exists “wholly virtually”

Looking ahead

In the Sedaghatpour case, the courts were applying Virginia law; however, given the uniform development of “physical loss” throughout the country in the COVID-19 context, I expect other courts around the country will come to the same conclusion when the issue of how to treat digital assets comes before them.  I likewise observe that some insurers have revised their policy language to state expressly that the loss of “electronic currency” is not covered. 

These recent court cases confirm that individuals owning cryptocurrency should take extra care to protect their digital assets and should not rely on standard language in homeowners insurance policies to hedge against theft.

Michael Menapace is a Triple-I Non-Resident Scholar, Co-chair of the Insurance Practice Group at Wiggin and Dana LLP, a professor of Insurance Law at the Quinnipiac University School of Law, and a Fellow of the American College of Coverage Counsel.

Auto Insurance, Homeowners Insurance, Insurers and the Economy, Legal Environment, Market Conditions, Regulation

JIF 2024: What’s In a Name? When It Comes to Legal System Abuse, A Lot

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By Lewis Nibbelin, Contributing Writer, Triple-I

From “social inflation” to “tort reform” to, simply, “fraud,” settling upon uniform terminology to describe  litigation trends that drive up costs – including insurance premiums – for all Americans is a primary challenge to addressing them, according to participants at Triple-I’s 2024 Joint Industry Forum.

“As we’re trying to raise awareness of this problem with consumers, ‘social inflation’ doesn’t work,” said discussion moderator and Triple-I’s Chief Insurance Officer Dale Porfilio. Though Triple-I previously favored “social inflation,” consumer testing was done that suggested a better name was needed. “That’s when we landed on ‘legal system abuse.’”

“The name absolutely matters,” said Viji Rangaswami, senior vice president and chief public affairs officer for Liberty Mutual. “When you talk to a legislator, whether that’s in Kansas or in Washington, D.C., and you say the words, ‘social inflation,’ they don’t know what you’re talking about. But when you say the words ‘legal system abuse,’ you see the lightbulb go off.”

Louisiana Insurance Commissioner Tim Temple – a self-described “unicorn” among insurance regulators, given his decades-long background in the industry as an agent, broker, and company president – even renamed programs to address “legal system abuse” when he assumed office in January. This shift exemplifies Temple’s commitment to using his experience to shape a regulatory and statutory environment that enhances the attractiveness of Louisiana’s insurance market.

“We’re getting more buy-in now, people understand it,” Temple said. “That’s part of transparency – talking about what it truly is.”

Clear communication is key

Opaque, ill-defined language empowers predatory “billboard attorneys” to define these terms themselves, contributing to pervasive policyholder distrust, said Jeff Sauls, Farmers Insurance head of legislative affairs.

“There’s this perception of the insurance industry amongst the public – and plaintiffs’ attorneys help portray this – as a high-margin business,” he said, when, in reality, “we compete with grocery stores for who can make less money in an average year.”

Attorney advertising – estimated to total over $2.4 billion across the U.S. last year – has commandeered the messaging once associated with insurers, noted Temple, who encouraged the industry to “take back that high ground” of providing “dependability and stability during the worst days of people’s lives” without overuse of brand mascots or jingles.

“We have to remind the public why we exist,” Rangaswami added. “We want to pay claims as expeditiously as possible…. We’re on the side of the consumer, whereas the plaintiffs’ attorney is often on their own side or the investor’s side.”

Third-party litigation funding

With her reference to “investors,” Rangaswami took aim at a little-known, rapidly growing practice called third-party litigation funding (TPLF), in which investors with no stake beyond potential profit step in to fund lawsuits against corporate entities perceived as having deep pockets. As of last year, such investors retained an estimated $15.2 billion in assets for U.S. litigation alone.

Only a handful of states require mandatory disclosure of TPLF, which enables hedge funds and other foreign funders to compound and profit from protracted and even fraudulent U.S. court cases. Secrecy surrounding TPLF prevents insurers and regulators from identifying, let alone mitigating, the risks of increased costs and time to resolve claims disputes.

Preventing adversaries to the U.S. from exploiting TPLF to influence settlement outcomes and access sensitive defense information is another concern.

“We’re looking at TPLF as potentially exacerbating national security risk,” said Jerry Theodorou, policy director for finance, insurance, and trade at the R Street Institute. “Most people don’t know what TPLF is and the way it can insidiously impact the economy, our businesses, our jobs.”

Everyone is affected

Legal system abuse costs the highly litigious states Louisiana and Georgia over 175,000 jobs combined and thousand-dollar “tort taxes” for each resident per year, earning both states recurring spots on the American Tort Reform Foundation’s list of “Judicial Hellholes.” They also rank among the least affordable places for auto and homeowners’ insurance by the Insurance Research Council – an affiliate of The Institutes, like Triple-I.

Louisiana recently enacted a law enforcing some oversight over TPLF, Temple noted, as well as repealed a unique “three-year rule” that impeded actuarially-sound underwriting. But as the state’s bodily injury claims climb well over the national average, more reform is needed to return insurance profitability to the state.

“One thing I would look to is importing some of the good things Florida has done,” Theodorou suggested, explaining that reform curtailing contingency and one-way attorneys’ fees “have brought down the number of lawsuits against insurance companies by 24 percent” for the second consecutive three-quarter period. “Notice of intention to sue is also down by double digits. It’s working, so let’s learn from that.”

Considering the fact that the former “poster child” for legal system abuse generated over 70 percent of all homeowners insurance litigation nationally in 2022 – despite accounting for only about 15 percent of total homeowners claims – Florida’s reduced premium growth and nine new property insurers this year reveal the likely efficacy of such reforms in other states.

Education and coalition building

But such reform requires advocacy, which requires consumer education and coalition building across diverse stakeholder groups, Rangaswami pointed out.

Fixing “an economy-wide problem,” she explained, requires an “economy-wide coalition.”

The end goal is not a “tilted playing field,” Sauls emphasized. “We’re trying to get to a place where we are all on level footing, without being exploited by plaintiffs’ attorneys.”

Legal system abuse “is going to be a pressure point for the industry moving forward,” stressed Fred Karlinsky, shareholder and global chair of Greenberg Traurig, LLP. “No state is immune from what we’ve seen in Florida.”

Karlinsky emphasized that spreading normalization of “nuclear” (over $10 million) and an emergent class of “thermonuclear” (over $100 million) verdicts will stall reform in newly targeted states.

Rangaswami pointed out that not all the news has been bad.

“We had some great wins in 2024,” she said, citing Florida’s improved insurance market and legislation introduced at both the federal and state levels as movement in a promising direction. “But we have to keep this momentum up.”

Learn More:

Triple-I Issues Brief: Legal System Abuse

Agents Play Critical Role in Navigating Impacts of Legal System Abuse on Customers

Legal System Abuse/Social Inflation Adds Costs and Challenges for US Casualty Insurance: AM Best

Who’s Financing Legal System Abuse? Louisianans Need to Know

Legal Reforms Boost Florida Insurance Market; Premium Relief Will Require More Time

How Georgia Might Learn From Florida Reforms

U.S. Consumers See Link Between Attorney Involvement in Claims and Higher Auto Insurance Costs: New IRC Report

Inflation Continues to Drive Up Consumers’ Insurance CostsTriple-I Launches Campaign to Highlight Challenges to Insurance Affordability in Georgia

Disaster Resilience, Insurance Industry, Insurers and the Economy, Legal Environment, Market Conditions, Risk Management

Climate Resilience and Legal System Abuse Take Center Stage In Miami

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Triple-I’s Joint Industry Forum this week in Miami brought together subject-matter experts from across insurance, academia, government, and the nonprofit space to discuss climate resilience, legal system abuse, and – most important – what is being done and must continue to be done to ensure insurance availability and affordability during this period of evolving perils and policy challenges.

The insight-rich and engaging panels and “Risk Takes” will be generating Triple-I blog content for weeks to come. The following is a brief wrap-up.

While our times are “riskier than ever,” Triple-I CEO Sean Kevelighan pointed out that the U.S. property/casualty insurance industry “is well poised to manage these risks.” At the same time, he and many participants noted that collaboration and coalition building are critical for long-term success.

With respect to climate resilience, such collaboration is already taking place. Veronika Torarp, a partner in PwC Strategy’s insurance practice and moderator of the Climate Resilience panel, discussed the multi-industry coalition PwC is developing with Triple-I and other partners. Marsh McLennan’s managing director for public sector Dan Kaniewski – who moderated the Success Stories panel – discussed a project funded last year by Fannie Mae and managed by the National Institute of Building Sciences (NIBS) that culminated in a roadmap to incentivize investment in urban flood resilience across “co-beneficiary” groups.. Triple-I played an integral role in the NIBS project, which is currently seeking communities and partners for implementation of the roadmap.

In the area of legal system abuse, there was much conversation around the benefits to Florida of recent reforms in terms of making the Sunshine State more attractive to insurers again by discouraging excessive and fraudulent litigation. Legal system abuse is a multi-headed monster that drives up costs for everyone – from home and car owners to businesses and taxpayers – and, although progress has been made to fight it in Florida and elsewhere, it is expanding as quickly as those states are able to advance in tamping it down. Triple-I’s Dale Porfilio moderated a lively panel on the topic that included Louisiana Insurance Commissioner Tim Temple; Farmers Insurance head of legislative affairs Jeff Sauls; Viji Rangaswami, senior vice president and chief public affairs officer for Liberty Mutual; and Jerry Theodorou, policy director for finance, insurance, and trade at the R Street Institute.

Peter Miller, president and CEO of The Institutes, moderated the Innovation panel, which included Denise Garth, chief strategy officer at Majesco; Paul O’Connor, vice president of operational excellence at ServiceMaster; Kenneth Tolson, global president for digital solutions at Crawford & Co.; and Reggie Townsend, vice president and head of the data ethics practice at SAS. These subject-matter experts discussed how generative AI and other technologies are transforming insurance strategy and operations and increasing opportunities to improve and advance this most human-centered industry.

All four panels – as well as the Risk Takes and the “Fireside Chat” featuring Kate Horowitz, executive vice president of The Institutes, and Casey Kempton, president of personal lines for Nationwide Insurance – will be reported on in greater detail in subsequent posts.