Legal system abuse — not just general economic inflation — has driven $231.6 billion to $281.2 billion in excess liability insurance losses over the past decade, according to a new analysis by Triple-I and the Casualty Actuarial Society (CAS).
The big picture: The report found the impacts of rising claim severity, jury awards and third-party litigation financing have outpaced U.S. inflation, inflicting higher premiums and financial strain on insurers and policyholders across personal and commercial lines.
- Data showed roughly one-third of recent increases in auto liability losses stem from litigation behaviors, rather than frequency of claims.
- Even as overall inflation eases, structural shifts in the legal landscape continue to drive persistently elevated insurance costs, the analysis shows.
By the numbers:
- Personal Auto Liability: Legal system abuse and inflation increased losses and defense and cost containment (DCC) by $91.6 billion–$102.3 billion, or 8.7%–9.7% of booked losses.
- Commercial Auto Liability: $52.0 billion–$70.8 billion, or 22.6%–30.8% of booked losses.
- Other Liability – Occurrence: $83.4 billion–$103.3 billion, or 27.4%–34.0% of booked losses.
- Product Liability – Occurrence: $4.6 billion–$4.8 billion, or 27.1%–28.0% of losses and DCC.
What we’re saying: “Legal system abuse, manifested through excessive verdicts and litigation behaviors, has fueled a structural rise in claim costs that continues to increase costs for insurers and policyholders alike,” said Sean Kevelighan, CEO,Triple-I.
What they’re saying: “While general economic inflation is an important factor, legal trends, ranging from litigation financing to larger jury verdicts, have amplified costs well beyond what the CPI-U would suggest,” said James Lynch, FCAS, MAAA, and co-author of the study with William Nebbelin, senior research actuary, Triple-I.