As the insurance industry continues to navigate the complexities of the modern legal landscape, trade associations are gearing up to make a significant push in 2025 to mitigate the impact of third-party litigation funding (TPLF). This funding mechanism, which involves external investors financing litigation in exchange for a share of the proceeds, has been a growing concern for insurers due to its potential to drive up litigation costs and distort the legal system.
The Growing Concern
Third-party litigation funding has seen a surge in recent years, particularly in intellectual property and commercial litigation. This trend has raised alarms within the insurance industry, as it can lead to increased litigation costs, prolonged legal battles, and inflated settlement demands. Insurers argue that TPLF introduces a profit motive that can overshadow the pursuit of truth and justice, ultimately affecting the fairness of the legal system.
Trade Associations’ Priorities
Leading insurance trade associations, such as the American Property Casualty Insurers Association (APCIA) and the Wholesale & Specialty Insurance Association (WSIA), have identified TPLF as a top priority for 2025. These organizations are planning to lobby legislators and federal regulators to implement measures that would increase transparency and regulation of TPLF.
Key Strategies
1.Increased Transparency: Trade associations aim to push for legislation that mandates disclosure of third-party funding arrangements in litigation. This would allow courts and opposing parties to be aware of the financial interests involved, promoting fairness and accountability.
2.Regulatory Oversight: Lobbying efforts will focus on advocating for federal regulations that oversee TPLF practices. This includes setting standards for disclosure, ethical conduct, and limits on the influence of funders in litigation decisions.
3.Education and Awareness: Trade associations plan to launch educational campaigns to raise awareness among lawmakers, regulators, and the public about the potential risks and implications of TPLF. By highlighting the impact on insurance affordability and availability, they hope to garner support for regulatory changes.
4.Collaboration with Stakeholders: Engaging with other stakeholders, including legal professionals, consumer advocacy groups, and businesses, will be crucial in building a coalition to address the challenges posed by TPLF. Collaborative efforts can lead to more comprehensive and effective solutions.
Expected Outcomes
The ultimate goal of these lobbying efforts is to create a more balanced and transparent legal system that minimizes the negative effects of TPLF. By increasing oversight and promoting ethical practices, insurers hope to reduce litigation costs and ensure that the legal process remains fair and just for all parties involved.
Conclusion
In 2025, trade associations are making it clear that mitigating the impact of third-party litigation funding is a top priority. Through strategic lobbying, increased transparency, and collaboration with stakeholders, they aim to address the challenges posed by TPLF and promote a fairer legal system. The success of these efforts will depend on the support and cooperation of legislators, regulators, and the broader legal community.
For more information or help, contact the Insurance professionals of EPIC’s CRA ProRental™ Insurance Program. Call us at 800.234.6363 or email us at prorental@epicbrokers.com.