A key driver of social inflation, legal system abuse has permeated parts of the casualty market in recent years, prompting many business and insurance industry advocates to make it a key priority in the 2026 advocacy agenda.

The issue is embodied by factors including TPLF, which involves a financer unrelated to a case providing funds to a plaintiff to cover expenses including attorney fees and expert witnesses.

In addition, juries have been awarding bigger payouts in recent years. These are known as nuclear verdicts when they exceed $10 million, or thermonuclear verdicts when they exceed $100 million.

“I think what we're seeing in the courts is that the trial bar has been able to leverage some of the rules of civil procedure and some of their tactics to tip what we call the scales of justice more in their favor — it's off-balance now,” said Bonnie Guth, Head of Government Affairs at Munich Re America Services.

“Many of their tactics are driving up judgments. We will start to learn more about some of them, such as TPLF. It is not very transparent yet, although the laws are changing to require disclosure in more jurisdictions. We should be able to start to see more about the impact that TPLF is having on the casualty market.” 

Guth said the wider business community, in addition to the insurance sector, has collectively advocated for reforms to target legal system abuse and that some previous legislative developments in certain US states give cause for optimism.

In Florida, major reforms that took place in 2022 and 2023 are now starting to stabilize the state’s insurance market.

In October 2025, Florida Governor Ron DeSantis and Insurance Commissioner Michael Yaworsky said the reforms had driven down rates, attracted new insurers, and reduced litigation.

According to the Florida Office of Insurance Regulation, 17 new companies have entered the homeowners market, 33 companies have filed for rate decreases, and reinsurance market rates have declined. 

Guth said FLOIR’s data shows that “since passing those reforms, the Florida market has really turned around and started to strengthen and stabilize.”

“They have multiple new entrants into the market, they show many insurers decreasing rates, and many insurers not asking for any rate increase at all,” she said.

“So it shows how reform can really help a situation and strengthen an insurance market.”

She said similar reforms have the potential to improve insurance markets in other states.

“Georgia set up reforms in 2024 and 2025 that we hope turn that market around and we're optimistic there.

“Other states like Louisiana passed major reforms too, and we're hoping to see their data reflect some improving markets.”

Peter Macdonald, Chief Claims Officer for Munich Re Specialty – North America, said the firm takes measures from the outset to help its program's clients manage claims with rising loss costs due to legal system abuse.

These measures have changed considerably over the last decade, he explained. 

He said these measures ensure that “our insureds are getting the right guidance from us with the support of tools and escalation processes so that the claims get to the right experts.”

Macdonald added how “storytelling” has become more important in defense cases.

“We want to make sure that both our defense counsel and our witnesses tell our insureds’ stories.”

“Our MGA and program administrator partners have to be thinking about who will be telling that story on behalf of the company in partnership with their defense counsel. (They need to think about) who would be those corporate witnesses — that's an increasingly important role in a litigation environment.”

Legal system abuse has become such a prominent issue within the casualty space that any consistent mitigation efforts will require time and resources along with a concerted effort by the whole business community.

However, certain steps can be taken. Specifically, as demonstrated by Munich Re Specialty, awareness of the issue at an early stage is critical. In addition, working with MGAs and program administrators from the outset can provide crucial support.

More broadly, legislative developments in the US that have led to reform in insurance markets creates cause for optimism going forward.

This article was produced by Program Manager, in collaboration with Munich Re Specialty. The Insurer news staff had no role in the production of this content.