Most Americans believe that lawyer advertising increases the number of liability insurance claims and lawsuits, according to recent research from the Insurance Research Council (IRC). The survey also showed that consumers see a connection between lawyer advertising and insurance costs.
The IRC ̵1; like Triple-I, a subsidiary of The Institutes – also found that consumer awareness of third-party financing has increased, although many Americans are still unsure of what to think of the method. Trial financing – where third-party investors bear all or part of the cost of a trial in exchange for a percentage of the settlement – is often mentioned as contributing to “social inflation”. Social inflation refers to the effect of rising litigation costs on insurers’ claims payments, loss ratios and ultimately how much policyholders pay for coverage.
“The public sees a link between lawyer ads and the cost of insurance,” said IRC CEO and Triple-I CEO Dale Porfilio, FCAS, MAAA. “Two-thirds of those who had an opinion said that advertising from lawyers increases the number of liability claims and lawsuits. 59 percent said that such advertising increases insurance costs.”
The survey also found that 81 percent of Americans had seen a lawyer’s ad in the past year. 39 percent had never heard of the term “litigation financing”.
IRC study, Public attitudes about litigation and the role of lawyers in car insurance claims, consisted of an online survey with over 1,500 respondents. It also revealed that:
- Consumers generally expect insurance companies to settle car insurance claims fairly and quickly, but one in four say they would hire a lawyer before even contacting an insurer.
- Many consumers’ views on the benefits of hiring lawyers to help with insurance claims conflict with evidence from claims-based research;
- Most Americans believe that there are too many personal injury lawsuits today;
- There are significant generational differences in these subjects, with younger respondents being much more likely than older ones to positively view lawyers’ involvement and litigation; and
- The public’s level of understanding suggests certain educational opportunities for those who want to address costs in the insurance system.
“This study is based on many years of IRC work examining the role of lawyers in insurance claims and the resulting consequences,” said Porfilio. “Our long-running series of closed investigations into car damage claims has shown an ever-increasing share of lawyer involvement, even among claims without fault.”
Porfilio noted that these studies consistently show that applicants who hired lawyers waited significantly longer to receive their settlements and – after medical costs and legal fees – these settlements were smaller than for applicants who did not.
“Given the costs added to the system and the lack of evidence of clear benefit to the plaintiff, it is important to understand the public’s attitudes about the involvement of lawyers,” Porfilio said.