Leading on Legal System Abuse

One of the most significant challenges facing the insurance marketplace is the continued growth of tort inflation fueled by legal system abuse.

Larger verdicts, higher legal expenses, aggressive litigation tactics, and greater uncertainty around liability outcomes are affecting organizations across many industries.

The impact of these trends extends far beyond individual claims. They influence how businesses invest, hire, and grow, and can shape an organization’s confidence in taking risks. They also affect the cost and availability of insurance protection, creating ripple effects that influence investment decisions, business growth, and economic activity across entire industries.

CNA views this as more than a public policy issue. It is a business risk with implications for customers, brokers, and the long-term health of the marketplace.

Insurers have an important role in advancing practical reforms that improve transparency, strengthen predictability, and support a more balanced legal system. We cannot treat abuse of that system as an inevitable cost of doing business. Addressing it requires a sustained, industry-wide commitment to collaboration and reform.

Predictability Supports a Stronger Marketplace

A stable and predictable legal environment helps businesses invest, hire, grow, and serve their customers. For the insurance industry, litigation costs directly affect loss trends, coverage affordability, and claims outcomes, which in turn can influence the choices businesses make about their future.

When uncertainty increases, the effects are felt not only by insurers and policyholders, but across the broader economy.

Leadership Requires Collaboration

Complex challenges rarely have simple solutions, and insurers must take a broad and strategic approach to addressing the effects of legal system abuse.

CNA’s approach is reflected in our Tort Inflation Interdisciplinary Panel, which brings together experts from across the organization to identify trends, assess business impacts, and develop internal and external strategies to help mitigate the effects of tort inflation.

We bring that same disciplined approach to advocacy, working with policymakers, brokers, customers, and industry partners to support meaningful reforms that improve transparency, accountability, and predictability. No single organization can solve this challenge alone.

Reform is Producing Results

Florida’s 2023 reforms helped establish momentum by directly addressing one-way attorney fees and substantially modifying the existing bad faith framework to provide important guardrails for insurers. As a result, the state shows signs of market stabilization, including greater competition, improving loss ratios, and early rate relief. Georgia and Louisiana also have pursued significant reforms aimed at addressing challenges in their markets.

In New York, CNA worked with a strong coalition of insurers, brokers, and policyholders to achieve consequential auto liability reforms enacted earlier this year, including stronger tools to address staged accident fraud and restore greater balance to the system.

Third-party litigation funding remains a priority. Increased transparency around who is financing lawsuits and the influence those funders may have on individual plaintiff cases is essential to a fair and accountable legal process.

This progress reflects growing recognition that litigation financing should not operate without appropriate visibility and accountability.

These reforms matter. They are helping to improve market conditions while demonstrating that meaningful progress is possible when stakeholders remain focused on practical, balanced solutions.

Brokers’ Critical Role

For brokers, this issue is increasingly central to client counsel. Commercial clients demand more than capacity. They want insight, stability, and partners who understand the forces driving loss trends.

Because brokers sit at the intersection of customers, insurers, and the broader marketplace, they are uniquely positioned to help clients understand how litigation trends affect risk, claims outcomes, insurance costs, and business decisions. They can bring policyholder perspectives into conversations about transparency, predictability, and reform.

Turning Progress Into Lasting Change

Legal system abuse will not be addressed through any single reform. Turning early progress into lasting change will require carriers, brokers, policyholders, and industry organizations to continue speaking with a unified voice while backing that advocacy with disciplined action.

As leaders, we have a responsibility to look beyond today’s challenges to consider the long-term health of the businesses, customers, and communities we serve. By working together, we can preserve the legal stability and predictability businesses need to invest, grow, and create opportunities for the future.