Role of third-party litigation on insurance costs
New insights and perspectives on Florida’s property insurance reforms and what lies ahead in this new year, how Florida’s lessons on auto insurance are being applied in New York, Alabama has just quantified its similar insurance problems, plus, new insight on the impact of third-party litigation funding on insurance costs. It’s all in this week’s Property Insurance News.
Property Insurance Market Insights: In our last edition, we told you about the Governor and Insurance Commissioner’s news conference on the eve of the legislative session, touting the latest numbers on the improvements that reforms have brought to Florida’s property insurance market. This week, we’re happy to share a brief television interview with one of our market leaders, Stacey Giulianti, the chief legal officer of Windward Risk Managers, the parent company of Florida Peninsula, Edison and Ovation insurance companies. He provides his views on what the 2026 market should look like! Watch here.
Florida’s Lesson for New York: The Wall Street Journal’s January 16 editorial (Florida’s Insurance Reform Lesson for New York) boasts Florida’s success in slashing automobile insurance premiums and how it could be a model for New York. Florida’s 2023 Insurance Consumer Protections & Market Reforms dealt with both property insurance and auto insurance. The repeal of one-way attorney fees for plaintiff attorneys included auto claims cases; the prohibition on Assignment of Benefits (AOB) contracts included those between auto glass repair shops and drivers; and rate filings by carriers were required to reflect cost savings from these reforms. The result was outlined in the Governor and Insurance Commissioner’s news conference: Florida’s major auto writers have filed for premium reductions of 7-15%, with State Farm cutting rates by 20% since 2024. Progressive is refunding policyholders $1 billion. Those savings are also being enjoyed by ride-share drivers and their customers. The editorial outlines New York Governor Kathy Hochul’s recently announced plan to likewise curb excessive litigation and fraud, writing “Taking on the trial bar requires pluck, but it can also pay dividends. Mr. DeSantis has every reason to brag about them.” The New York state senate in November heard more about Florida’s reforms as it faces its own dilemma in rising homeowners insurance costs, as we previously reported.
Meanwhile, Next Door in Alabama: Unfortunately, our neighbors in Georgia and Alabama are going through what we went through pre-reforms. The Alabama Department of Insurance reports that claims litigation and large trial verdicts are on the rise, inflating insurance companies’ costs that are being reflected now in higher automobile and commercial liability premiums. Its latest data call shows that for all liability lines except homeowners, the number of claims dropped from 2020 to 2024 – yet the share of litigated claims rose by nearly a third—from 10% to 13%. The average payout jumped 45%, with total payouts up 38% in that period, far exceeding the national inflation rate. You can read more in the Insurance Journal.
Third Party Litigation Funding (TPLF): A new analysis performed for Citizens Against Lawsuit Abuse finds that TPLF is imposing billions of dollars in costs on the U.S. economy and contributing to higher prices for households and businesses. TPLF involves outside investors financing lawsuits in exchange for a portion of any award. They are typically not disclosed to the court or any of the parties in the case, and are linked to prolonged litigation, larger verdicts, and significant inefficiencies across the civil justice system. The Florida Legislature this session is considering HB 1157 to regulate TPLF (see our Bill Watch for more).
Key Findings include:
- $35.8 billion in direct annual economic losses tied to third-party litigation funding
- Including broader economic effects, TPLF results in $54.2 billion in lost gross product and 454,450 fewer jobs each year
- Consumers face $192.79 per person and $607.27 per household in annual losses due to lower earnings and higher prices
- TPLF contributes to inflation across critical household expenses, including auto and home insurance.
LMA Newsletter of 1-26-26
