Mark Friedlander, Director of Communications for the Insurance Information Institute (III), said that legal system abuse is increasing costs in California, with plaintiffs' attorneys targeting consumers after disasters. Friedlander's comments were made in an Insurance Insider US post on February 26.
"California is a key focus this year following the devastating Los Angeles wildfires," said Friedlander. "Legal system abuse is driving up the costs across private passenger auto, homeownersʼ and commercial lines. Plaintiffs' attorneys are preying on vulnerable consumers after catastrophes like hurricanes or wildfires and need to be reined in. Instead of settling claims directly with insurers, consumers are being encouraged to contact a billboard attorney to handle their claim. Legislation to address legal system abuse at the state level is essential to curb these practices which are negatively impacting households and economies across the country."
According to an analysis from Insurance Insider US, California's insurance market is encountering growing challenges due to alleged legal abuses that are inflating costs for insurers. Experts have noted that tort reform is a significant issue, with states such as Georgia, Oklahoma, and Louisiana considering measures to address similar concerns. The legal environment in California has contributed to instability within its insurance sector, making reform a critical focus for lawmakers. The broader insurance industry is closely observing how states manage these legal and financial pressures.
A Wall Street Journal editorial dated January 16 highlighted the different approaches taken by California and Florida in managing their home insurance markets. It noted that California's Democratic insurance commissioners have historically suppressed insurance rates, leading to market distortions and reduced coverage availability. In contrast, Florida implemented reforms to tackle similar issues, resulting in a more stable insurance environment. The editorial suggested that California could benefit from adopting strategies akin to Florida's to enhance its insurance market.
California reportedly has some of the highest tort costs per household in the United States, with total tort costs reaching $72 billion or $5,429 per household. A report by the U.S. Chamber Institute for Legal Reform underscores the financial burden of the state’s tort system. Stephen Waguespack, President of ILR, emphasized the necessity for reform to mitigate excessive litigation costs. These high costs impact businesses and consumers by driving up prices and limiting economic growth.
According to a February 18 post on InsuranceRateReporter.com, a survey conducted by the American Property Casualty Insurance Association (APCIA) and Munich Re US found that plaintiff lawyer tactics such as third-party litigation funding (TPLF) and jury anchoring contribute to rising insurance costs, with an estimated $529 billion impact on the U.S. economy. The survey indicates that 69% of Americans believe these practices increase insurance premiums while 86% support legal reforms to address them. However, a significant portion of respondents remain unaware of these tactics; 75% are unfamiliar with jury anchoring and 70% do not recognize TPLF.
Mark Friedlander serves as the Director of Corporate Communications at III where he oversees media relations and corporate initiatives particularly in Florida. He joined III in 2019 as a Florida Communications Consultant before being appointed to his current role in 2020. With over ten years of experience leading corporate communications within the insurance industry, Friedlander brings extensive expertise to his position.