Survey Exposes Lack of Awareness Among Americans Regarding Litigation Costs and Their Impact

A recent survey conducted by the American Property Casualty Insurance Association (APCIA) and Munich Reinsurance America, Inc. reveals a significant gap in the American public’s understanding of litigation costs and their broader economic impact. The survey, engaging over 2,000 U.S. adults, uncovered that 65% of respondents were oblivious to the "tort tax," which burdens American households with an average annual cost of $3,621. This expense is indirectly incurred through daily necessities such as groceries and gasoline. Additionally, the findings brought to light that a majority of Americans are unaware of third-party funding in litigation, where entities like hedge funds finance lawsuits in exchange for a portion of the settlement or jury award.

The survey also highlighted a lack of awareness regarding the portion of settlements or jury awards that plaintiff lawyers typically receive, with 47% of respondents in the dark about this practice. However, there is a strong push among Americans for greater transparency and regulatory measures, with 88% advocating for full disclosure of financial interests in civil lawsuits and 86% calling for legislative action to curb legal system abuses.

The call for reforms is underpinned by a 2021 Perryman Group study, which outlined the staggering economic losses stemming from legal system abuses, including millions of lost jobs and significant reductions in government revenues. Industry leaders from APCIA and Munich Re US have voiced their support for these reforms, emphasizing the need for transparency and the eradication of predatory practices within the legal system to restore its balance and integrity.