CCO Summit Preview: Getting Ahead of Legal System Abuse

As Dale Porfilio, chief insurance officer, Insurance Information Institute (Triple-I) astutely observes, “Legal system abuse, known within the insurance industry as social inflation, is contributing to the rising impact of litigation costs and claim payouts.”

Porfilio will deliver a detailed presentation on this topic, aptly titled, “Legal System Abuse,” at CLM’s upcoming Chief Claims Officers Summit (CCO Summit), which will be held in conjunction with CLM’s Claims College in Austin. “My presentation will start from Triple-I’s definition of legal system abuse and its underlying drivers, then transition to various approaches to quantify its impacts, and close with an overview of what the industry is doing to reduce the adverse impact of future legal system abuse,” says Porfilio.

Porfilio will also share some important recent research from the Insurance Research Council (IRC) about attorney involvement in insurance claims, leveraging a recent consumer survey and Triple-I’s new Auto Injury Claims Analytics Database (AICAD).

Below, Porfilio answers some questions about what CCO attendees can expect from his presentation:

Q: What would you say has been the biggest development over the past year with respect to legal system abuse, either positively or negatively for the industry?

Porfilio: The biggest positive is the increased momentum within state legislatures, and even within the U.S. Congress, for mandatory disclosure of third-party litigation funding (TPLF) of insurance claims. Several states passed meaningful legislation in 2024, and we expect more progress in 2025.

Unfortunately, we are not hearing or seeing any abatement of the underlying symptoms that drive legal system abuse. Exploitative plaintiff attorney advertising is omnipresent, and our latest quantification indicates growing adverse impacts in personal and commercial auto.

Q: You mentioned the momentum over the past year to raise awareness about TPLF. We’ve seen business and insurance groups prioritize the issue, and recently, at the national level, we saw a congressional hearing that sought to find common-ground solutions with promises to follow through with legislation. Is the tide turning, and, if so, why?

Porfilio: The tide is definitely turning on raising the awareness about TPLF. Triple-I’s legal system abuse campaign has been active for over two years now. We continue to amplify research and educational content—whether our own or from other organizations aligned with our mission—to build that momentum. Broader fears of foreign influence of U.S. interests are also contributing to more federal and state legislatures being willing to consider disclosure of, and some restrictions on, TPLF investors.

Q: There are many interests that should be concerned about the lack of TPLF transparency, and insurers would have to be near the top of the list. How would you assess the industry’s involvement up to this point to raise awareness about the negative impacts of TPLF?

Porfilio: TPLF transparency efforts are benefiting from strong alignment among the U.S. Chamber of Commerce and its many state chambers—representing the interests of businesses and communities—supplemented by insurance industry trade organizations like the Triple-I, APCIA, NAMIC, RAA, ATRA, CIAB, and IIABA. Our opportunity comes in replicating this alignment on other aspects of legal system abuse to make an even greater impact.

Q: Can you discuss some of the latest tools the industry is using to quantify the impacts of legal system abuse?

Porfilio: Both Triple-I and IRC are engaging in original research on legal system abuse. Triple-I is finishing its fourth study in its series to quantify the overall impact of increasing inflation on personal and commercial auto liability losses. We expect to release this paper, sponsored by the Casualty Actuarial Society, in early Q4.

The IRC is nearly complete in assembling AICAD. It will contain five years of closed personal auto injury claims from nine carriers writing 43% of the U.S. market share. This will allow us to explore a wide range of research topics, including the prevalence and impact of attorney involvement and medical utilization in auto injury claims. We are thankful for our members sharing their rich data with us and excited to deliver original research to benefit our member carriers and public policymakers for years to come.

Don’t miss Porfilio’s presentation at the CCO Summit in Austin on Wednesday, Sept. 4.