Rising claim severity poses an ongoing challenge for property and casualty (P&C) insurers, even as the industry remains financially strong. Legal system abuse remains a significant contributor to soaring claim costs, and Triple-I CEO Sean Kevelighan will deliver a presentation at CLM's upcoming CCO Summit in Baltimore, beginning Sept. 9, that covers the state of the industry and the impact of legal system abuse.
Triple I CEO Sean Kevelighan
Kevelighan spoke with CLM about what chief claims officers can expect during the presentation, but he also offered views on the legal landscape overall. Specifically, Kevelighan addresses third-party litigation funding reform efforts around the country, an update on nuclear verdicts and their impact on claims costs, evolving plaintiff’s attorney tactics, and how the industry is responding to all of these pressures.
Read what Kevelighan has to say about these topics and his presentation below.
Q: What are some of the highlights you will discuss regarding the state of the industry and legal system abuse? What should CCOs who are attending the CCO Summit know about the presentation and the material that will be covered?
A: The P&C insurance industry remains financially strong and well positioned to fulfill its obligations to policyholders, but liability insurers continue to face significant pressure from rising claim severity. The presentation will examine how legal system abuse, including excessive jury awards, third-party litigation funding, attorney advertising, and increasingly aggressive litigation strategies, is driving claim costs beyond what can be explained by ordinary economic inflation.
Recent research from Triple-I and the Casualty Actuarial Society estimates that legal system abuse and related litigation trends contributed between $231.6 billion and $281.2 billion in additional liability losses and defense costs over the past decade. The data also show that severity, rather than claim frequency, is the primary driver of these increases.
For chief claims officers, the discussion will focus on what these trends mean for claims management, reserving, litigation strategy, affordability, and the long-term availability of liability coverage. This is not simply a legal or underwriting concern. It is an enterprise-wide risk that requires coordination across claims, legal, actuarial, underwriting, communications, and government affairs.
Q: What trends are you seeing as far as legal system abuse? On an issue like TPLF, we’ve seen quite a bit of momentum across the states to address the concerns of insurers and the business community. Has this held true for other forms of legal system abuse, or is the momentum heading the other way outside of TPLF?
A: The momentum surrounding third-party litigation funding is encouraging. A growing number of states are pursuing disclosure requirements, restrictions on foreign funding and other safeguards. North Carolina recently became the first state to enact a broad prohibition on litigation investments tied to case outcomes, while Ohio, Colorado, Mississippi, Oklahoma, Tennessee, and Utah have adopted or advanced various transparency measures.
However, progress is uneven. TPLF has attracted bipartisan attention because the lack of transparency and the possibility of undisclosed financial interests influencing litigation are relatively easy concerns to understand. Other forms of legal system abuse, including excessive attorney advertising, inflated medical damages, mass-tort plaintiff recruitment, and increasingly aggressive demands for noneconomic damages, are more difficult to address and remain deeply embedded in some jurisdictions.
There is greater recognition of the problem, but reform continues to vary considerably from state to state. Some states are addressing the underlying cost drivers, while others are considering proposals that could expand liability or make the litigation environment even more challenging. The overall direction is therefore mixed, although the growing focus on affordability is helping policymakers better understand that litigation costs are ultimately borne by consumers and businesses.
Q: How do you believe the industry is adapting to legal system abuse trends? Are they finding creative ways to fight back, or are they instead finding other ways to absorb or pass along those costs?
A: Insurers are adapting on several fronts. Claims organizations are placing greater emphasis on early case evaluation, litigation analytics, fraud detection, venue analysis, and identifying claims that could develop into high-severity cases. They are also using mock trials, jury research, and more coordinated defense strategies to better understand how cases may be presented and perceived.
The industry is also investing in technology and data to identify litigation patterns, questionable medical billing, organized fraud, and attorney involvement earlier in the claims process. At the same time, insurers must continually adjust reserves, pricing, underwriting, and available limits to reflect the risks they are assuming.
It would be overly simplistic to say insurers merely pass these costs along. Insurance pricing is regulated, competitive, and based on expected future losses. When claim and litigation costs rise persistently, however, those costs eventually affect premiums, coverage terms, available limits and an insurer’s willingness to deploy capital in particularly challenging markets. That is why addressing the causes of legal system abuse is preferable to continually trying to manage its consequences.
Q: Nuclear verdicts continue to be a big topic of discussion among our membership. What are you seeing as far as verdict trends? Is there some leveling off of runaway verdicts, or can we expect the problem to get worse going forward?
A: We have not yet seen convincing evidence that nuclear verdicts are leveling off. The latest comprehensive data found that 135 nuclear verdicts were issued against corporate defendants in 2024, an increase of 52% from 2023. Their combined value reached $31.3 billion, more than double the previous year’s total.
The concern also extends beyond the relatively small number of verdicts exceeding $10 million. These highly publicized awards establish new reference points for settlement negotiations and can influence the value of thousands of claims that never reach trial. In that sense, nuclear verdicts cast a much wider shadow over the liability system.
Factors such as litigation funding, attorney advertising, anchoring juries with exceptionally large monetary demands, and growing distrust of corporations continue to create upward pressure. Verdicts will fluctuate from year to year, but the underlying conditions driving higher awards have not disappeared. Without greater transparency, balanced legal reforms, and more effective defense strategies, it would be premature to conclude that the problem has peaked.
Q: What are some of the most significant shifts you have seen among plaintiff’s attorney tactics? Is there anything new they are doing that should concern claims departments?
A: Plaintiff attorneys have become more sophisticated in combining litigation strategy, behavioral science, digital advertising, and outside capital. One important development is the scale at which potential plaintiffs can now be recruited through television, radio, billboards, search advertising, and social media.
Legal service providers spent more than $2.5 billion on approximately 26.9 million advertisements in 2024. These campaigns can create a false sense of urgency, encourage individuals to pursue litigation before considering other options and influence potential jurors long before a case enters a courtroom. Third-party funding may allow firms to sustain these campaigns and aggregate large numbers of claims into mass-tort or multidistrict litigation.
In the courtroom, plaintiff attorneys are frequently using anchoring strategies involving very large damage requests, highly emotional storytelling, corporate-conduct narratives, and arguments designed to encourage jurors to “send a message.” Claims departments should also be alert to coordinated medical treatment, inflated billing, litigation-generated medical expenses, and increasingly rapid attorney involvement immediately following a loss.
The practical lesson is that insurers need to identify these patterns early. By the time a claim reaches trial, many of the factors determining its potential severity may already be firmly established.
Q: If you had one overall message for how insurers should navigate the current legal landscape, what would that be? Where should the industry’s focus be to weather current trends and set claims departments up for success going forward?
A: My central message would be that insurers cannot treat legal system abuse as a series of isolated claims. It is a structural risk that must be measured, anticipated, and addressed across the organization.
Claims departments should focus on early intervention, consistent data collection, appropriate reserving, strong defense partnerships, and identifying cases with the potential for disproportionate severity. Insurers also need to communicate more effectively about how the claims process works, why excessive litigation costs affect affordability, and why reasonable transparency and legal reforms benefit consumers as well as businesses.
The industry must continue paying legitimate claims fairly and promptly while defending against fraud, inflated demands, and practices that undermine the integrity of the civil justice system. Success will require a combination of strong claims execution, better use of technology and analytics, disciplined litigation strategies, public education, and sustained engagement with policymakers. No single reform or defense technique will resolve the issue, but a coordinated approach can help restore greater predictability and balance to the system.