The legal landscape in the insurance industry is becoming more challenging and costly with increasing rates of attorney representation in liability claims, according to a new report from Sedgwick, a global provider of claims management, loss adjusting and technology-enabled business services to property/casualty insurers.
The big picture: The rise in attorney representation across the U.S., attributed to aggressive marketing by billboard lawyers, coupled with the growth of third-party litigation funding (TPLF) by dark money investors, is negatively impacting insurers and generating higher premiums for their policyholders, Sedgwick’s report noted.
By the numbers:
- 17.2% in 2023 for general liability bodily injury claims attorney representation, which increased from 14.1% in 2022.
- 47.7% in 2023 for auto liability bodily injury claims attorney representation, a 2% increase from 2022.
- 71% of respondents to a 2023 LexisNexis consumer survey reported their attorney encouraged them to seek additional medical treatment following an auto accident, and 25% said their attorney was primarily responsible for setting their treatment.
- 280,122 new lawsuits were filed in Florida in March 2023, prior to the implementation of a broad-sweeping tort reform bill eliminating one-way attorney fees for personal and commercial insurance lines.
- 33,000 liability lawsuits filed in Florida in May 2024, despite tort reform.
What they’re saying: “A well-organized plaintiff’s bar is evolving its strategies aimed at inflaming juries to maximize results. They have created podcasts, webinars, seminars and even developed university-like training institutes,” Sedgwick’s reportstated.
Yes, but: The report also highlights the growing influence of TPLF, which has expanded rapidly due to lack of regulation, and is likely to face increased scrutiny from the judicial system and lawmakers over security and ethical concerns.