Big ‘I’ Survey: Consumers Blame Lawsuit Surge for Rising Insurance Costs

Massachusetts insurance coverage lawsuits

New survey shows widespread concern that excessive lawsuits are hurting policyholders

A new national survey from the Independent Insurance Agents & Brokers of America suggests that “social inflation” is no longer just an actuarial talking point—it’s now front and center for policyholders themselves. As insurance-related lawsuits reach record levels, a large majority of consumers say they are worried that excessive and abusive litigation is driving up their premiums and misusing the legal system.

For P&C carriers and independent agents, the findings underscore that rising claim severity and litigation costs are now felt not only in loss triangles and combined ratios, but in household budgets on Main Street, where customers increasingly connect courtroom dynamics to the price of their coverage.

“Consumers are absolutely correct. They are paying the price for unnecessary lawsuits in the form of higher insurance costs for their households,” said Charles Symington, Big “I” president & CEO. “The survey makes it clear: Americans want reform and accountability. Independent agents are working with their customers, so they further understand the impact of lawsuit abuse and how to advocate for reform.”

Economic Impact: “Thousands of Dollars” Per Household

According to the survey, 64.3% of respondents said they were concerned about how excessive lawsuits increase their premiums, and 80.5% believe that the legal system is used in ways that unfairly drive up insurance costs. Overwhelmingly, 8 in 10 (80.3%) respondents also believed that their premiums would increase due to excessive lawsuits, even if they had never filed a claim themselves.

According to The Perryman Group, lawsuit abuse is costing the average American family $5135 a year. Another recent study from the Insurance Information Institute (Triple-I) and Munich Reinsurance America, Inc. (Munich Re US) estimates the impact is even higher—at more than $6,500 for a family of four.

Consumers also expressed skepticism about who truly benefits from lawsuits against insurers. Nearly three-quarters (73%) said attorneys and law firms profit most, compared to only 30.9% who believe consumers with valid claims benefit.

Third-Party Litigation Funding Drives Costs Even Higher

Despite awareness of traditional lawsuit abuse, the survey noted that many consumers remain unfamiliar with the term “third-party litigation funding”. In fact, nearly 40% said they were not at all familiar with this trend, underscoring a gap in public understanding of how global capital is increasingly driving U.S. insurance litigation and consumer costs.

A 2022 Report from the Triple-I entitled, What is third-party litigation funding and how does it affect insurance pricing and affordability?” may explain why. The 2022 report noted that third-party litigation was a new “fast-growing business” in which outside investors—such as private equity firms, hedge funds, university endowments, trusts, and other large capital providers—finance lawsuits in exchange for a share of any recovery.

Unlike banks, who typically are unwilling to lend against a lawsuit, these investors step in, providing billions of dollars each year to plaintiffs, law firms, and even corporate defendants to cover legal fees, expert witnesses, jury consultants, and, in personal cases, living or medical expenses. As Sean Kevelighan, CEO, Triple-I states in the report “Third-party litigation funding (TPLF) has devastatingly become a multi-billion-dollar global industry, turning lawsuits into investments at the expense of societal good.”

Growing Call for Action and Reform

As more consumers become aware of the problem, however, they say they are ready for change. The latest survey by the Big I reveals growing demand for action to rein in abusive litigation and restore fairness to the insurance system.

89.7% say it’s important to reduce unnecessary lawsuits to help control insurance costs.
84.3% would support reforms if they knew certain legal practices were making their insurance more expensive.
A majority (54.8%) believe that the state and federal government should take the lead in addressing the issue, while many also pointed to insurance companies (33.6%) and courts (32.6%).

“Consumers overwhelmingly agree that unchecked litigation is not protecting them, it’s costing them. It directly affects their family budgets by adding thousands of dollars every year in unnecessary costs for their insurance and other products and services,” added Symington.