Plaintiff Legal Advertising Surge Raises Insurance Cost Concerns
In 2024, plaintiff attorneys significantly increased their legal advertising expenditures, spending over $2.5 billion on more than 26.9 million ads nationwide, marking a rise of over 32% since 2020. This surge reflects a broader trend in civil litigation marketing. However, the implications of these advertisements extend beyond the legal sector, impacting insurance companies and ultimately, consumers. Higher lawsuit activity driven by aggressive litigation can elevate costs across the property and casualty insurance markets, affecting premiums and claims processes.
Dr. Robert P. Hartwig, Clinical Associate Professor of Risk Management, Insurance and Finance at the University of South Carolina and Director of the Center for Risk and Uncertainty Management, highlights concerns about lawsuit abuse and its financial impact on consumers. He emphasizes the role of frivolous lawsuits in increasing costs for consumers, insurers, and the overall economy. The increased legal activity and advertising contribute to a complex regulatory and compliance environment for insurers who must navigate these expanded claim and litigation risks.
This environment places upward pressure on insurance costs, particularly in property/casualty sectors, driven not only by underlying risk factors such as inflation but also by litigation-related expenses. The intersection of rising legal advertising expenditures and lawsuit payouts underscores the need for stakeholders, including insurers and regulators, to evaluate current frameworks for managing legal risks and claims.
Dr. Hartwig's insights, shared during an interview hosted by the American Property Casualty Insurance Association, also stress the importance of regulatory reforms to curb excessive litigation costs. Stakeholders such as insurers, regulators, legislators, and industry experts are engaged in discussions aimed at improving the balance between access to justice and controlling the economic impact of lawsuits.
The dialogue around litigation costs is relevant for U.S. insurance professionals as it affects underwriting, claims handling, and pricing strategies. Understanding how legal advertising trends correlate with litigation volumes and insurance market dynamics can inform risk management and strategic business planning. This analysis is crucial amid a challenging economic backdrop characterized by inflation and rising consumer costs.