Americans Believe Attorney Advertising Leads to Higher Auto Claim Settlements: IRC

Americans believe that attorney advertising increases auto insurance costs by encouraging more legal involvement, which leads to higher claim settlements and legal expenses, according to a study by the Insurance Research Council (IRC), titled “Public Opinions on Attorney Involvement in Insurance Claims.” The study builds and expands upon previous IRC studies.

Prevalence of Attorney Advertising

“With legal ads appearing across multiple mediums, from television and radio to billboards and social media, public exposure to attorney advertising has steadily increased over the past decade,” the report states. Data from the Travelers Institute shows that over 16 million attorney advertisements ran last year. “To put this in perspective, approximately 45,000 TV ads soliciting legal claims air across the [U.S.] each day. This breaks down to about 1,900 ads per hour—equivalent to one lawyer ad airing on television every two seconds.”

The survey finds that most respondents (89%) reported seeing attorney advertising in the past year, up eight percentage points from 2021 survey results. Furthermore, almost half of respondents reported seeing an increase in the amount of attorney advertising. “Notably, those with recent claim experience were most likely to report an increase (62%), compared with 42% of those who had not filed a claim in the last three years. Likewise, survey takers who hired or interacted with lawyers were more likely to perceive an increase in advertising.” 

All in all, 60% of survey respondents believe attorney advertising increases the number of lawsuits and liability claims. “Less than one in five (18%) said it had no effect. Only 5% stated that the amount of attorney advertising actually decreases the number of claims and lawsuits. Seventeen percent said they did not know. Similarly, more than half of respondents (52%) said that attorney advertising increases the cost of insurance. Twenty-three percent said it has no effect, slightly more than the 21% who did not know, and only 4% said that it decreases the cost of auto insurance.”

Interestingly, four in 10 claimants stated that they would settle with an insurer before hiring an attorney, however, while three out of 10 stated they would hire an attorney only if they had problems settling. Two out of 10 said they would hire an attorney before consulting with the insurance company.

Auto Accident Attorney Advertising

They survey shows that auto accidents are the most commonly featured cases in attorney advertising. “[Six] out of 10 survey takers believe that attorney advertising raises the overall cost of insurance by driving up the numbers of claims and settlement values,” according to the survey results. “Survey results show that an increasing majority of consumers believe attorney advertising increases the number of claims and lawsuits and drives up the cost of auto insurance.”

Notably, among respondents who filed auto insurance claims, “those who reported seeing attorney advertising were more likely than those who had not seen the ads to say they consulted an attorney in connection with their claim.”

Furthermore, “auto accidents were the most commonly cited type of case by all age groups, but some differences were seen by age,” according to the study. “Older respondents were more likely to mention auto accidents: 88% of respondents age 65 and older reported legal advertising related to auto accidents, compared with just 67% of respondents age 24 years and younger.” Additionally, respondents in urban locations were less likely to report auto accidents (71%) when compared to their suburban (80%) and rural (81%) counterparts.

The majority of claimants consulted attorneys after an auto injury claim, according to the survey. “In the U.S., the frequency of auto injury claims remains relatively low and has been declining over time. According to a recent IRC study, the number of bodily injury claims per 100 insured vehicles was 0.65 in 2022, about half of its peak level reached in 1995. Respondents were asked whether they or anyone in their household had filed an auto insurance claim for injuries in the past three years. Out of the 2,063 respondents, 16% reported filing a claim, while 81% said they had not.”

Support for Transparency in Litigation Financing

Although awareness of and familiarity with litigation financing has grown since the IRC conducted a survey in 2016, consumers’ opinions remain neutral on lawsuit lending, according to the report. “Even after reading a brief description of some of the pros and cons associated with it, most respondents still do not have a firm opinion (being either neutral or unsure) about litigation financing,” indicating that public opinion is unsettled. However, a large majority of respondents supported disclosing third-party participants, indicating strong support for transparency in litigation funding.