New Report Highlights Cost of Personal Automobile Litigation

WASHINGTON - The American Property Casualty Insurance Association (APCIA) today released a report highlighting the cost impact that rising personal automobile litigation is having on businesses and consumers nationwide. The following statement may be attributed to Bob Passmore, APCIA's department vice president of personal lines.

The report, entitled "Trends in Attorney Representation: US Private Passenger Automobile Insurance" was conducted by the Milliman actuarial firm and examined close to one million claims over a 10-year period. The report concludes that based on the 10-year study of private passenger automobile insurance claims, claims with attorney involvement increased significantly. The costs to resolve a claim are dramatically higher when an attorney is involved, and the time it takes to resolve claims with attorney involvement is substantially prolonged, with over 20% of claims with an attorney still unresolved after two years.

Key findings:

• Based on the 10-year study of private passenger automobile insurance claims, claims with attorney involvement rose from 11.5% to 15.3%.
• Attorney involvement can drive up the average cost to resolve a claim 15-20 times.
• In five years, the number of claims greater than $50,000 has doubled.
• Time from claim report to claim closure is much longer when claimants have attorneys.
  • Without an attorney, two-thirds of claims are closed within 90 days of reporting and only 2% are open after two years.
  • Claims with attorney involvement, less than 9% are closed within 90 days of reporting and over 20% remain open after two years.

"APCIA is advocating for commonsense reforms that support regulations that address deceptive or misleading lawyer advertising and include transparency and disclosure in third party litigation funding.

"Consumers are led to believe through aggressive and sometimes misleading advertising that they need to call a lawyer rather than their insurer when they have an insurance claim. The ideas of 'easy money' is a temptation that's hard to resist. This is apparent through the plaintiff attorneys who flood the airwaves and billboards across the country advertising their services and encouraging civil litigation. Legal services ads spend by plaintiff lawyers totaled more than $2.5 billion for more than 26.9 million ads in 2024. This is an increase of more than 32% compared to 2022. But the reality is that consumers end up with a false promise of a huge payday for at least two reasons: they don't know that their insurer will make them whole and they don't realize how much of this money goes to lawyers, their vendors and funders.

"When you have a claim, call your insurance company or agent first. Or if your claim cannot be resolved with the company or agent, call your state insurance department. Otherwise, you may pay the price for legal system abuse."