Everything covered elsewhere in this library largely takes the perspective of claimants, funders, and the lawyers who work with both. The insurance industry sees the same market very differently, as a meaningful driver of what it calls “social inflation”: liability claims costs rising faster than wages, medical costs, or general prices can explain. Swiss Re Institute's sigma 4/2024 report, the first to formally isolate a “Social Inflation Index” from ordinary economic inflation, found the U.S. figure averaged 5.4% annually from 2017 to 2022 and peaked near 7% in 2023, a trend the Institute says shows no sign of abating. So-called “nuclear verdicts” (jury awards of $10 million or more) rose 52% in 2024 to a record 135 cases, and “thermonuclear” verdicts above $100 million rose even faster, with five individual verdicts exceeding $1 billion that year alone.
Insurers name third-party litigation funding specifically as one accelerant among several. The mechanism they describe is straightforward: by covering upfront costs and absorbing the downside risk of a loss, funding lets plaintiffs reject early settlement offers and hold out for trial, where the largest verdicts are possible, extending case durations and pushing the overall distribution of outcomes toward higher-value results. That framing has already produced real policy: Georgia's 2025 tort reform, for instance, now requires litigation funders to register with the state's Department of Banking and Finance and can hold them jointly and severally liable for frivolous litigation, and several other states enacted comparable funder-specific provisions the same year.
It's worth stating plainly that this is an interested party's account, not a neutral one, in exactly the way that funder-commissioned research arguing funding improves case screening (covered elsewhere in this library) is also an interested party's account. The insurance industry has a direct financial stake in attributing rising claims costs to an external cause rather than to its own pricing and underwriting choices, and researchers outside the industry point to shifting juror demographics, declining institutional trust, and plaintiff-side trial strategy as at least equally significant drivers of the same verdict data. What isn't contested is that this is now a live, well-funded regulatory fight, not a settled question, and litigation funding has become a central, named target in it.