The American Property Casualty Insurance Association (APCIA) recently reiterated that when the civil justice system is used "for profit instead of fairness," the costs flow through into insurance premiums and the wider economy, not just into court awards.
In a new campaign and explainer segment fronted by economist Robert Hartwig, APCIA estimated that the US tort system now adds nearly $6,000 a year to the typical household's costs in the form of higher prices and reduced choice.
Recent analyses suggest that the median "nuclear" jury award in US liability cases reached around $44 million in 2023, nearly double the median in 2020, with particularly sharp increases in commercial auto and premises liability. Those trends have helped drive double-digit premium increases in casualty lines, such as commercial auto, umbrella, and excess liability, even as other parts of the P&C market have begun to soften.
APCIA is also highlighting the rapid growth of third-party litigation funding.
Global capital committed to litigation finance is estimated at roughly $13 billion, with projections that it could exceed $50 billion by the mid‑2030s, and the US remains the largest single market.
While funders and some legal commentators argued that this improves access to justice, insurers are concerned that a growing pool of investor capital seeking returns from lawsuits could prolong disputes, increase settlement demands, and add to social inflation.
Elevated and less predictable liability costs are feeding into pricing, retention levels, and capacity deployment.
Carriers are tightening terms and conditions, pushing higher deductibles and self-insured retentions, and in some jurisdictions stepping back from tougher classes, such as long-haul trucking or certain medical risks. In personal lines,pressure on auto and homeowners liability components is one factor behind a wave of rate filings and, in some states, underwriting withdrawals.
APCIA described legal system abuse as a "hidden cost-of-living tax," arguing that higher litigation costs ultimately show up in household budgets through both insurance premiums and everyday prices.
The association’s call for “commonsense reforms” – including greater transparency around litigation funding, action on misleading legal advertising, and procedural changes aimed at more proportionate awards – is framed as a way to ease cost‑of‑living pressures without restricting access to the courts for legitimate claims.
The campaign is a reminder that forces outside traditional economic indicators remain central to US liability performance. How state and federal policymakers respond to calls for greater disclosure of litigation funding, changes to tort rules, or reforms targeted at nuclear verdicts will be a key determinant of market conditions over the rest of the decade.
If reforms gain traction, carriers could see some easing in severity trends and more stability in long‑tail business. If not, social inflation and legal system dynamics are likely to remain a major headwind for casualty writers, with knock‑on effects for pricing, capacity, and ultimately for households and businesses already dealing with higher costs elsewhere in the economy.
