Legal System Abuse: The New Name Driving Insurance Industry Reform

The 2024 Joint Industry Forum, hosted by Triple-I, highlighted a shift in the insurance industry’s approach to addressing escalating litigation costs. Formerly referred to as "social inflation," these costs are now being framed as "legal system abuse" to improve clarity and resonate with lawmakers and consumers. The rebranding reflects a strategic communication effort to combat the public perception of insurance companies as overly profitable, often perpetuated by aggressive plaintiff attorneys. Clear terminology, according to speakers, is essential for building trust and facilitating legal reforms.

Third-party litigation funding (TPLF) emerged as a major concern, with its lack of transparency enabling prolonged legal battles and potential national security risks. Louisiana’s Insurance Commissioner Tim Temple shared his state’s strides in oversight and reform, but the conversation revealed a broader need for national action. Florida’s success in reducing frivolous lawsuits through fee reforms and pre-litigation notice requirements served as a model for replication elsewhere.

Speakers emphasized the need for industry advocacy, consumer education, and coalition building to tackle what they describe as an "economy-wide problem." Despite challenges, 2024 saw significant wins, such as Florida’s stabilizing market and promising legislation at state and federal levels. However, as nuclear and "thermonuclear" verdicts spread, the insurance industry faces an uphill battle to ensure fairness and sustainability in the legal system.