As property and casualty insurers grapple with rising costs and a challenging market, a recent Senate hearing highlighted the potential for litigation reform to help make insurance more affordable. On May 2, 2025, Robert Gordon, a senior vice president at the American Property Casualty Insurance Association (APCIA), spoke before the Senate Committee on Banking, Housing, and Urban Affairs. He emphasized that excessive litigation and misuse of the legal system are putting financial pressure on the insurance sector.
Gordon pointed out that while most insurance regulations are handled at the state level, the trends in litigation affect the entire nation. He believes this presents an opportunity for federal lawmakers to step in and make changes that could lower costs for consumers. By addressing certain litigation practices, insurers could reduce their expected losses, which might lead to lower premiums.
He explained that the current situation is compounded by various factors, including inflation in property repair costs and delays in regulatory approvals for rate changes. These issues are particularly pressing in areas facing increased risks from climate change. Gordon noted that APCIA advocates for private insurance markets supported by clear legal frameworks, which they believe lead to better outcomes for consumers.
However, he cautioned against government interventions that could distort the market, such as rate suppression and expanded state insurance programs. Gordon warned that these could limit consumer choice and make insurance less accessible. He stated, “Government rate suppression, coverage mandates, and escalating legal costs disrupt markets and can make insurance decreasingly affordable and available.”
In 2023, plaintiff lawyers reportedly spent over $2.4 billion on advertising legal services, contributing to a culture of excessive litigation. Additionally, third-party funding for lawsuits has become a significant industry in the U.S., valued at $15.2 billion. In response, Florida recently passed House Bill 1179, which aims to regulate litigation funding by requiring disclosure of funders and limiting their influence in court cases.
Gordon expressed APCIA’s willingness to collaborate with lawmakers from both parties to explore federal reforms. These changes could help alleviate costs for consumers and reduce financial risks for taxpayers. The discussion around litigation reform is ongoing, and many are hopeful that it could lead to more affordable insurance options for everyone.