Trouble on the horizon: Missouri Department of Commerce and Insurance warns of growing strain on the state's insurance market from escalating lawsuit abuse

Rising premiums expected to continue unless targeted legal reforms are enacted

JEFFERSON CITY, Mo. - A new report issued by the Missouri Department of Commerce and Insurance warns that lawsuit abuse is driving up insurance costs across the state, placing a growing financial burden on Missouri families, businesses and essential service providers while also jeopardizing economic activity.

The report finds that social inflation - defined as the increase in the severity of insurance claims beyond what can be explained by purely economic factors - has outpaced economic inflation in recent years, creating mounting pressure on insurers and policyholders alike.

"Missouri families are already feeling the impact of rising insurance costs, and lawsuit abuse is only worsening the problem," DCI Director Angela Nelson said. "When litigation tactics push awards far beyond reasonable damages, those costs don't just disappear - they show up in higher premiums for consumers and businesses across the state."

From 2017 to 2022, social inflation increased by 5.4% annually, compared to 3.7% for economic inflation, according to Swiss Re data cited in the report. In Missouri alone, the economic toll is substantial. The Perryman Group estimates that excessive litigation results in a "tort tax" of $1,216 for each Missourian, contributing to $7.6 billion in lost economic output and $384 million in lost state revenue each year.

The report highlights several practices contributing to rising litigation costs, including third-party litigation funding, in which outside investors finance lawsuits in exchange for a share of potential damages, as well as courtroom strategies designed to influence juries and encourage exceptionally large damage awards.

These pressures are already being felt throughout Missouri's insurance market:

• 63% of foster care providers report difficulty obtaining liability coverage, and 67% have seen premium increases exceeding 50%.  
• Homeowners insurance premiums are rising at 8-12% annually.  
• Medical malpractice rates have increased for six consecutive years, with Missouri among 16 states experiencing hikes above 10%.  
• Nationwide, private passenger auto liability has produced $43 billion in underwriting losses, and Missouri insurers have filed for double-digit rate increases in recent years.

Social inflation has largely eroded the benefits of past legislative reforms in Missouri, and St. Louis remains ranked as the sixth-worst "Judicial Hellhole" in the nation for 2025-2026, highlighting ongoing challenges in the state's litigation environment.

"If these trends continue, Missourians and businesses will continue to see higher premiums, have fewer insurance options, and suffer broader economic consequences," Director Nelson said. "Without meaningful reforms, the impact of lawsuit abuse will continue to grow, and all Missourians will ultimately pay the price through higher insurance premiums."

The report points to reforms adopted in Florida and Georgia as potential models for Missouri, where both states have seen greater market stability, increased participation from insurance carriers, and improved conditions in several insurance lines.

"Missouri has an opportunity to act before the problem worsens," Director Nelson added. "Strategic reforms that promote fairness and transparency in the legal system will stabilize the insurance market, protect consumers, and strengthen Missouri's economy."

To view the full report on DCI's website, click here. DCI is charged with protecting Missouri consumers through oversight of the insurance industry, banks, credit unions, utilities and various professional licensees operating in the state. For more information about the department, please visit our website at dci.mo.gov.