Tom Gaitens, the executive director of Florida Citizens Against Lawsuit Abuse (CALA), said tort reform is needed to settle injustives against businesses and customers during Lawsuit Abuse Awareness Week.
“Tort reform is needed now, more than ever,” Gaitens said in a post on X. “It’s time to bring attention to the injustices in civil justice abuses that are driving up costs for businesses and consumers alike.”
October 7 through October 11 is Lawsuit Abuse Awareness Week, an initiative to raise awareness of the growing misuse of the U.S. civil justice system. A key factor driving up litigation costs is third-party litigation funding (TPLF), which has significantly contributed to the rising cost of insurance claims, known as social inflation.
A Fitch report states that in mid-2024, renewals saw rate increases of up to 15% for loss-affected accounts and 10% for no-loss accounts. However, reinsurers argue these increases are not enough to cover growing risks and are seeking further rate hikes and reductions in coverage limits and quota-share commissions.
Swiss Re notes that the convergence of these adverse trends has resulted in significant underwriting losses in the liability insurance market. From 2019 to 2023, direct combined ratios were 105% for other liability occurrence, 109% for commercial auto liability, and 106% for medical malpractice, leading to cumulative underwriting losses of $43 billion.
Swiss Re further states that “rate increases have not compensated for rising loss costs.”
Companies like Uber and Lyft have joined calls to clamp down on TPLF, recognizing its role in encouraging frivolous lawsuits and exacerbating the financial strain on businesses.
The rising costs of litigation, driven by social inflation—including attorney involvement, multi-million dollar verdicts, and litigation funding—are adding pressure on reinsurers, leading to tightened risk selection and reduced exposure to certain lines of business.
Tom Gaitens is the executive director of the Florida branch of Citizens Against Lawsuit Abuse (CALA). He previously served as the State Director of FreedomWorks.org and has served on boards and organizations including Florida Taxpayers Union, James Madison Institute-Tampa Regional, The Boys and Girls Club of Riverview, and ALS Charter School.
