Insurance rates across the country have climbed steadily in recent years, leaving many consumers frustrated and searching for explanations. While several factors contribute to rising premiums—such as inflation, higher repair costs, and increased claim severity—one of the most significant drivers is the growing influence of the legal system on the insurance industry.
Attorneys often market aggressively to injury claimants, encouraging individuals to “lawyer up” immediately after an incident. While legal representation is sometimes necessary, the involvement of lawyers can dramatically increase the cost of a claim.
Studies from multiple insurance associations have shown that claims involving attorneys typically cost several times more than those settled directly between the insurer and claimant.
This is largely because:
Attorneys typically negotiate for higher settlements.
Medical treatment is often directed to high-cost providers aligned with law firms.
Claims take longer to resolve, increasing administrative and legal expenses.
Those higher claim costs ultimately feed into the pricing models insurers use—raising premiums for everyone, not just those involved in lawsuits.
Another trend impacting premiums is the rise of “nuclear verdicts”—jury awards that exceed $10 million or more. These massive payouts often reflect emotional responses from jurors rather than the actual economic damage involved.
Industries like auto, trucking, and commercial liability have been hit especially hard.
Insurance carriers must prepare for the possibility of these oversized verdicts by:
Increasing their reserves
Purchasing more reinsurance
Raising premiums across the board
Even if a single policyholder never goes to court, the industry’s overall exposure affects what everyone pays.
A newer trend—third-party litigation funding—allows outside investors to finance lawsuits in exchange for a share of the eventual settlement. This often encourages longer, more aggressive litigation strategies, resulting in:
Higher medical bills
Larger settlement demands
Increased legal fees
These artificially inflated claim costs again translate directly into higher insurance premiums.
When attorneys become involved, claims often take months or years to resolve. The longer a claim stays open:
The more legal work is required
The higher the administrative costs become
The more likely additional medical bills accumulate
Administrative expenses alone have risen significantly for carriers in the last decade, contributing to premium increases for policyholders.
While legal representation is a valuable resource when needed, the growing trend of attorney-driven claims and excessive litigation has real financial consequences. Insurance is a pooled system—when the cost of claims increases, premiums must rise to keep the system solvent.
Consumers can help mitigate these pressures by:
Maintaining good coverage to avoid personal lawsuits
Practicing safe driving and property maintenance
Reporting incidents promptly
Understanding when legal representation is actually necessary
The rising cost of insurance is a complex issue, but one undeniable factor is the increased involvement of attorneys and the growing number of high-value lawsuits. Litigation has become more aggressive, more expensive, and more frequent—and insurers must adjust their pricing to keep up.
The information provided in this article is for general informational purposes only and is not guaranteed to be 100% accurate, complete, or up to date. It should not be considered legal, financial, or professional advice. Laws and regulations may vary by state or locality. For guidance specific to your situation, please consult your local government, a licensed attorney, or a qualified professional.