A new analysis has found that legal system abuse and related litigation trends contributed between $231.6 billion and $281.2 billion in increased liability insurance losses over the past decade—far exceeding what economic inflation alone would explain.
The Insurance Information Institute and the Casualty Actuarial Society released the report examining liability insurance from 2015 to 2024. The analysis reviewed four insurance categories: personal auto liability, commercial auto liability, other liability–occurrence, and product liability–occurrence.
Personal auto liability saw losses and defense and cost containment expenses increase by $91.6 billion to $102.3 billion, representing 8.7% to 9.7% of booked losses. Commercial auto liability rose by $52.0 billion to $70.8 billion, or 22.6% to 30.8% of booked losses.
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Other liability–occurrence increased by $83.4 billion to $103.3 billion, or 27.4% to 34.0% of booked losses. Product liability–occurrence climbed by $4.6 billion to $4.8 billion, or 27.1% to 28.0% of losses and defense and cost containment expenses.
“This analysis illustrates that the severe spikes in liability insurance claims losses go well beyond normal economic inflation,” said Sean Kevelighan, CEO of the Insurance Information Institute. “Legal system abuse, manifested through excessive verdicts and litigation behaviors, has fueled a structural rise in claim costs that continues to increase costs for insurers and policyholders alike.”
The report found that claim severity, not claim frequency, drove the loss increases. While the number of claims generally declined, the average cost per claim surged, far exceeding overall economic inflation as measured by the Consumer Price Index for All Urban Consumers.
“The data clearly show that insurance loss inflation has its own unique drivers,” said James Lynch, co-author of the study. “While general economic inflation is an important factor, legal trends, ranging from litigation financing to larger jury verdicts, have amplified costs well beyond what the CPI-U would suggest.”
The analysis pointed to rising jury awards, litigation financing, and evolving legal dynamics as key factors behind higher claims costs and defense expenses. Loss development factors—actuarial measures of how claim costs evolve—have generally increased since 2008.
A separate Insurance Information Institute report on civil case filings estimated that excess value extracted through increased motor vehicle tort lawsuits from 2014 to 2023 totalled $42.8 billion.
The study used Schedule P Annual Statement data submitted to the National Association of Insurance Commissioners.
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