INCREASE TRANSPARENCY AROUND THIRDPARTY LITIGATION FUNDING (TPLF)
BACKGROUND
Third-Party Litigation Funding (TPLF) is the practice in which an outside group, corporation, individual, or even foreign entity not connected to the plaintiff, invests in a lawsuit in exchange for a portion of the monetary reward if the lawsuit is successful.
THE ISSUE
Currently, there are no federal requirements for legal counsel to disclose any third-party funding. As a result, insurance companies are unable to accurately calculate legal risk and associated cost. Over the past decade, the litigation funding industry has exploded. The median award for general liability verdicts over $1 million increased from $8.2 million in 2010 to $10.3 million in 2019—almost 26%.1 The average size of a verdict in trucking accident litigation soared from around $2.3 million in 2010 to $22.2 million in 2018 – nearly 850%.2 Consequentially, TPLF contributes to the inflation of insurance and leaves policy holders to cover the cost.
OUR POSITION
The Council supports addressing these soaring costs through increased transparency of TPLF and will continue to educate lawmakers about the consequences this practice has on insurance markets.
2 To Whose Benefit? Insurers and Policyholders Face Real Costs from the Growth of Litigation Funding as an Industry: 2024 (Leader’s Edge)
ABOUT US
The Council of Insurance Agents & Brokers is the premier association for the top regional, national and international commercial insurance and employee benefits brokerage firms worldwide. Council members are market leaders who annually place 90 percent of U.S. commercial property/casualty premiums, and 70 percent of all employee benefits business in the U.S.
KEY CONTACTS
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