Insurance Information Institute says attorney ads and third-party funding fuel legal system abuse

The Insurance Information Institute has issued a press release highlighting concerns about attorney advertising and third-party litigation funding, which it claims are contributing to legal system abuse and impacting the insurance industry.

According to the Insurance Information Institute (Triple-I), its latest issues brief, "Legal System Abuse and Attorney Advertising for Mass Litigation: State of the Risk," examines how aggressive attorney advertising and third-party litigation funding (TPLF) are reshaping the legal and insurance landscapes. Triple-I warns that these practices contribute to increased litigation, higher insurance claims, and delayed settlements. The organization emphasizes that the saturation of legal advertisements, often funded by TPLF, may be fueling legal system abuse and impacting the insurance industry.

Research from the American Tort Reform Association (ATRA), cited by Triple-I, indicates that legal service providers spent over $2.5 billion on 26.9 million ads in 2024 alone. Television ads peaked in 2023 with 16.4 million placements—a 44% increase from 2017—while radio ads surged to over 6.8 million in 2024, marking a 261% jump from 2017 levels. Outdoor advertising, including billboards, rose by over 260%. Triple-I suggests that this significant rise in attorney advertising, often underwritten by TPLF, may be contributing to legal system abuse and increased insurance costs.

The 2024 Westfleet Insider report, referenced in Triple-I's brief, estimates that TPLF assets under management reached $16 billion, with approximately 74% of commitments allocated to legal budgets. This influx of capital allows law firms to scale up legal efforts, including extensive plaintiff recruitment through advertising. Triple-I notes that this financial backing may be amplifying systemic challenges in the legal system, particularly affecting how insurers model risk and calculate premiums.

According to its official website, the Insurance Information Institute (Triple-I) is a nonprofit organization established in 1960 to improve public understanding of insurance through data-driven insights. An affiliate of The Institutes, Triple-I represents members responsible for nearly half of all U.S. property/casualty insurance premiums written. The organization provides analysis and resources to consumers, insurers, and policymakers to promote resilience and informed decision-making.