How Legal System Abuse Impacts Your Insurance — and What’s Behind It

If your insurance premiums have been going up — even if you haven’t filed a claim — you’re not imagining things. While inflation and rising repair costs play a big part, there’s another factor driving rates higher: growing abuse of the US legal system.

This behind-the-scenes problem is driving up costs in ways most people never see. It’s changing:

• The way claims are handled
• How juries view cases
• What we all pay for insurance

In this article, we’ll break down what legal system abuse is, introduce the five key reasons behind it, and explain why understanding those reasons matters to every policyholder.

What Is Legal System Abuse?

The challenges to our legal system arise when lawsuits, medical billing, and litigation tactics are used in ways that go far beyond what’s fair or reasonable. These tactics don’t just impact individual claims — they increase costs across the entire insurance system — costs that are eventually passed on to customers.

The Five Drivers

Here’s a look at the reasons why this problem is getting worse:

1. Increased Attorney Advertising

Attorney ads are everywhere — from billboards and TV commercials to sports sponsorships and social media. These ads often push the idea that anyone involved in an accident should "lawyer up" to get a big payout, which gradually reshapes public perception. Jurors exposed to these messages may come to consider million-dollar verdicts as the norm — even in cases that don’t warrant them.

2. Lawsuits Over Settlements

Many people now bypass the chance to settle directly with their insurer, going straight to a lawyer instead. While this might sound like the safer choice, ironically, it often leads to higher legal fees and medical costs. This results in the claimant coming away with less than they might have received from a fair, direct settlement.

3. Inflated Medical Costs

Some attorneys refer clients to doctors or clinics they’re closely connected with — sometimes even financially. These providers may order unnecessary treatments or bill at inflated rates, bypassing traditional health insurance. This drives up the cost of claims for everyone.

4. Advanced Tactics

Plaintiff attorneys are using sophisticated trial strategies — like anchoring (suggesting sky-high verdict amounts) and reptile theory (appealing to fear and anger instead of logic) — to push juries toward higher awards. Many are also adopting AI-driven tools that share data and insights across law firms faster than insurers and defense attorneys can respond. This gives lawyers for the plaintiffs a powerful advantage in litigation.

5. Third-Party Litigation Funding

This alarming trend involves investors financing lawsuits in exchange for a share of any settlement or verdict. Their goal? To maximize their profit, not necessarily to achieve a fair resolution. As a result, cases become bigger, riskier, and more expensive to defend.

Why This Matters to Policyholders

Even if you’ve never been in an accident or filed a claim, when these five factors combine, they create a ripple effect across the insurance industry:

• Claims cost more to settle
• Juries award larger verdicts
• Lawsuits take longer

And, ultimately, premiums go up — even for safe drivers who never file a claim.

Need Help Today?

If you’re ever involved in a loss, call us as soon as possible. The sooner we’re involved, the faster we can help you navigate the claims process, protect your rights, and settle your claim fairly and quickly. Contact Wawanesa and give us all the details — we’re here to guide you every step of the way.