Legal System Abuse Reforms Are Needed to Lower Consumer Costs
New Survey Finds Most Americans Agree Certain Plaintiff Lawyer Tactics Increase the Cost of Consumer Goods, Including Insurance
02/04/2025
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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 consumer attitudes about certain plaintiff lawyer tactics, including excessive lawyer advertising, generating nuclear jury awards, engaging in hidden third party litigation funding (TPLF), and jury anchoring.
The online survey, conducted by The Harris Poll among more than 2,000 U.S. adults, revealed a majority are not familiar with the terms “jury anchoring” (75%) and “TPLF” (70%). Once informed, 69% believe the practices of TPLF and jury anchoring will increase the overall cost of home, auto, and business insurance for all Americans, and 66% agree that these tactics will also increase the cost of everyday items, including consumer goods.
The other key findings of the survey show:
Lawyer Advertising and Jury Awards
- 67% agree that state and federal lawmakers should put restrictions on lawyer advertising to ensure that they’re not misleading consumers and to help reduce the number of lawsuits filed.
- 68% agree that the advertising of verdicts with [purported] large payouts desensitizes people to high jury awards.
- 68% agree that excessively high jury awards (e.g., nuclear verdicts -- those above $10 million) will increase the overall cost of home, auto, and business insurance for all Americans.
Third Party Litigation Funding (TPLF) – funding from outside investors not directly involved in a lawsuit in return for a portion of the jury award
- 77% agree that allowing foreign investors (i.e., outside of the U.S.) to be third party investors in civil claims and litigation in the U.S. could present a threat to national security.
- 78% agree that allowing foreign investors in civil claims and litigation in the U.S. should be prohibited.
Jury Anchoring – lawyers suggest an exorbitant award amount that is often unsubstantiated, which serves as a baseline amount for a jury award
- 75% agree that the practice of jury anchoring will increase the size of jury awards.
- 84% agree that plaintiff lawyers should support their suggested damage awards with factual evidence.
APCIA and Munich Re’s first survey, released in early 2024, emphasizes 86% of respondents agree that state and federal lawmakers should address abuses of the legal system and 88% believe there should be full transparency and disclosure of all the parties with a financial stake in a civil lawsuit.
Bonnie Guth, Head of Government Affairs, Munich Re America Services, said:
As an industry, it is important to raise awareness and provide education on how these legal practices impact not only the insurance industry, but ultimately the end consumer. Allowing this abuse of the legal system to remain unchecked, it will likely persist and send improper signals to jurors, judges, and defendants about the value of damages. In turn, this can lead to higher insurance costs, financial strain on insurers and reinsurers, depletion of municipal resources, and disincentives for businesses to take risks.
Stef Zielezienski, Executive Vice President and Chief Legal Officer, APCIA, added:
The misuse of the legal system fueled by plaintiff lawyer tactics, including misleading legal advertising, excessively high jury awards, third-party litigation funding, and jury anchoring, have promoted a litigious culture, which ultimately contributes to rising costs. This unchecked surge of litigation has had a far-reaching economic impact, costing the U.S. economy an estimated $529 billion and each household over $4,200. Reforms are needed to reduce consumer costs and improve insurance availability and affordability. The majority of Americans agree that these tactics are driving up insurance costs. We need state and federal policymakers to address legal system abuse to restore fairness and predictability of justice in the United States.
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. 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.
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