Reforms Are Needed to Address Abuses of the U.S. Legal System
New Survey Finds Most Americans Are Unaware Some Plaintiff Lawyer Tactics Negatively Impact Household Costs
03/04/2024
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WASHINGTON – The American Property Casualty Insurance Association (APCIA) and Munich Reinsurance America, Inc. (Munich Re US) today released survey results on certain perceptions of the U.S. legal system. The online survey, conducted by The Harris Poll among more than 2,000 U.S. adults, revealed that a majority of Americans are not aware of the negative impact plaintiff lawyers’ tactics, including predatory advertising and the use of third party litigation funding, have on their household costs via the “tort tax”, whether or not the household is involved in civil litigation. Many Americans are also not aware that the plaintiff lawyer keeps a high percentage of a settlement or jury award, and a large amount may go to third party investors who have no relationship to the claimant, other than to profit from their misfortune. A majority of Americans agree state and federal lawmakers should address the abuses of the U.S. legal system.
The key findings of the survey show that among over 2,000 U.S. adults:
- 65% are not aware every household pays an estimated “tort tax” that is an average of $3,621 per American household annually. The “tort tax” impacts consumers through the costs for everyday items like groceries and gasoline.
- 59% do not know that third parties, like hedge funds or foreign entities, who have no relationship to the plaintiff, often secretly finance litigation in exchange for a share of the jury award or settlement as a return on their investment.
- 47% are not aware the plaintiff lawyer in a civil lawsuit is likely to receive most of the jury award or settlement.
- 88% believe there should be full transparency and disclosure of all who have a financial stake in a civil lawsuit.
- 86% agree state and federal lawmakers should address abuses of the legal system (i.e., undisclosed third party funding and plaintiff lawyer advertising) to restore balance to the civil justice system.
According to a 2021 study from the Perryman Group, the toll of legal system abuse on the U.S. economy is staggering—resulting in the loss of 4.24 million jobs, $429.35 billion in output, and more than $110 billion in government revenues (federal, state, and local) annually.
Maura Freiwald, Munich Re US said:
This survey is an important step in raising awareness and educating the public about the tactics being used and the negative impacts of legal system abuse. This is not going away anytime soon. If left unchecked, it will lead to higher insurance costs, financial strain on insurers, depletion of municipal resources, and disincentives for businesses to take risks.
Stef Zielezienski, APCIA added:
Legal system abuse is rampant and plaintiff lawyers’ use of predatory advertising tactics and third party litigation funding have turned the U.S. legal system into an investment market, benefiting secret funders rather than the victim. The survey results are clear – the majority of Americans agree state and federal lawmakers need to address these abuses of the legal system. Common-sense reforms, including full transparency and disclosure of all parties with an interest in the outcome of civil litigation, are needed to restore balance to the civil justice system.
A survey infographic is available here.
Survey Method:
This survey was conducted online within the United States by The Harris Poll on behalf of APCIA from January 11-16, 2024, among 2,087 adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.5 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact APCIA.
Munich Reinsurance America, Inc. (“Munich Re US”) is one of the largest reinsurers in the United States. We provide reinsurance coverages, specialty reinsurance, and risk management solutions to commercial and personal lines insurance carriers, agents and brokers, program administrators, and managing general agents. Our admitted and non-admitted insurance company affiliates offer specialty insurance products. We provide insurance carriers with white-label products to help protect against the devastating effects of natural catastrophes and emerging risks, while our Innovation Lab offers client solutions in a rapidly evolving technology risk landscape. We believe that by looking out for our clients’ best interests with innovative risk solutions, we can help build more resilient communities and close insurance gaps. The American Property Casualty Insurance Association (APCIA) is the primary national trade association for home, auto, and business insurers. APCIA promotes and protects the viability of private competition for the benefit of consumers and insurers, with a legacy dating back 150 years. APCIA members represent all sizes, structures, and regions—protecting families, communities, and businesses in the U.S. and across the globe.
Disclaimer
This release contains forward-looking statements that are based on current assumptions and forecasts of the management of Munich Re. Known and unknown risks, uncertainties and other factors could lead to material differences between the forward-looking statements given here and the actual development, in particular the results, financial situation and performance of our Company. The Company assumes no liability to update these forward-looking statements or to make them conform to future events or developments.
