APCIA report finds rising legal costs impacting auto insurance claims

The American Property Casualty Insurance Association (APCIA) has released a new report examining the effects of increasing personal automobile litigation on businesses and consumers across the United States. The study, titled “Trends in Attorney Representation: US Private Passenger Automobile Insurance,” was conducted by Milliman, an actuarial firm, and analyzed nearly one million claims over a ten-year period.

According to the findings, attorney involvement in private passenger automobile insurance claims rose from 11.5% to 15.3% during the studied decade. The report also notes that resolving claims with attorney participation is significantly more expensive—on average, costs are 15 to 20 times higher compared to cases without legal representation. Additionally, claim resolution takes longer when attorneys are involved; less than 9% of such claims are closed within 90 days of reporting, while over 20% remain unresolved after two years. In contrast, two-thirds of claims without attorney involvement close within 90 days and only about 2% remain open after two years. The number of claims exceeding $50,000 doubled over five years.

Bob Passmore, APCIA’s department vice president of personal lines, stated: “APCIA is advocating for commonsense reforms that support regulations that address deceptive or misleading lawyer advertising and include transparency and disclosure in third party litigation funding.”

Passmore further commented on consumer perceptions shaped by legal advertising: “Consumers are led to believe through aggressive and sometimes misleading advertising that they need to call a lawyer rather than their insurer when they have an insurance claim. The ideas of ‘easy money’ is a temptation that’s hard to resist. This is apparent through the plaintiff attorneys who flood the airwaves and billboards across the country advertising their services and encouraging civil litigation. Legal services ads spend by plaintiff lawyers totaled more than $2.5 billion for more than 26.9 million ads in 2024. This is an increase of more than 32% compared to 2022. But the reality is that consumers end up with a false promise of a huge payday for at least two reasons: they don’t know that their insurer will make them whole and they don’t realize how much of this money goes to lawyers, their vendors and funders.”

He advised policyholders: “When you have a claim, call your insurance company or agent first. Or if your claim cannot be resolved with the company or agent, call your state insurance department. Otherwise, you may pay the price for legal system abuse.”

APCIA represents home, auto, and business insurers nationwide and advocates for competitive private markets benefiting both consumers and insurers.