If you’ve noticed insurance premiums rising faster than inflation, you’re not alone—and it’s not just because of weather, construction costs, or supply chains.
From shock verdicts to aggressive litigation and pervasive attorney advertising (billboards, radio, and TV), the legal environment is playing a bigger role in what consumers and businesses pay for coverage.
What is “Legal System Abuse”?
“Legal system abuse” is a broad term used in the insurance industry to describe practices that can drive claim costs higher than they otherwise would be by exploiting gaps or incentives in the civil justice process.
- Shock verdicts: jury awards that are far above historical norms
- Aggressive litigation tactics that extend claims and increase legal expense
- Third-party litigation funding, where outside investors fund lawsuits for a share of the outcome
- High-volume attorney advertising that encourages more claims and more lawsuits
Important note: People should always have access to fair compensation when they’re harmed. The concern is when incentives in the system push costs beyond what’s reasonable or predictable—costs that ultimately flow through to premiums.
Why shock verdicts matter (even if you never file a claim)
One unusually large verdict can influence many future claims. When “nuclear” or shock verdicts become more common, they can:
- Reset expectations for settlements across similar cases
- Increase defense costs and time-to-resolution
- Drive up reinsurance costs across the industry
- Create upward pressure on premiums for both personal and commercial lines
For Massachusetts families, that can show up in higher costs for auto, umbrella, and homeowners liability. For local businesses, it can impact general liability, commercial auto, and professional exposures.
Why it feels especially visible in Massachusetts
In Massachusetts, attorney advertising is hard to miss. When legal marketing becomes more aggressive and more constant, it can increase claim frequency and litigation rates. More lawsuits—and more expensive outcomes—can translate into higher loss costs, which insurers must account for when pricing coverage.
What insurers and industry groups are doing about it
This topic is now front and center in carrier and agent discussions, including the multi-company panel you mentioned. Efforts commonly discussed include:
- Consumer education about how legal costs impact rates
- Transparency initiatives (especially around litigation funding)
- Claims process improvements to resolve legitimate claims faster and more fairly
- Risk-based underwriting that better aligns pricing with real-world exposures
These conversations aim to restore balance while protecting consumers’ ability to pursue legitimate claims.
What you can do now: practical steps for consumers and businesses
1) Review your liability limits
In a world of larger verdicts, older liability limits can become outdated. It may help to review your auto and homeowners liability limits and consider whether an umbrella policy makes sense for your situation.
2) Reduce risk with documentation and prevention
For businesses, strong safety practices, written procedures, and clear contracts can reduce the likelihood of disputes and help claims resolve more efficiently.
3) Work with an independent agency
Independent agencies can help explore options across multiple carriers and coverage structures. The goal is to align your coverage with your real exposures and budget—especially when the broader environment is changing.
Our perspective at Risman Insurance Agencies
We believe insurance should be predictable, fair, and sustainable. When litigation costs rise faster than other factors, it adds uncertainty that can affect everyone—even people who never file claims.
If you’d like a quick coverage review, we can help you understand your options and discuss practical steps to protect your household or business.
Reminder: Insurance coverage cannot be added, deleted, or changed until confirmed in writing from our office.
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