How Legal System Abuse Is Driving Up Insurance Costs — And What Our Community Can Do About It

By Will Cheek, WBC Risk Partners

When most families or business owners in our community think about rising insurance premiums, they think storms, inflation, or supply-chain costs. And yes, those play their part. But there’s another driver pushing costs upward that rarely gets the spotlight: legal system abuse.

This isn’t about legitimate claims or fair compensation. It’s about a growing set of tactics—excessive lawsuits, predatory advertising, third-party litigation financing, and manufactured damages—that ultimately hit every household and business in the wallet.

And the data is staggering.

The Hidden Cost Every North Carolina Family Is Paying

According to national research summarized in the Trusted Choice Legal System Abuse Toolkit:

• Excessive litigation increases consumer costs by 1.32%.

• When lost economic productivity is added, the average American family pays an extra $5,135 per year as a result of lawsuit abuse.

• Tort costs have grown faster than the overall U.S. economy, rising to 2.07% of GDP.

• In just one year, businesses absorbed $366.8 billion in liability costs and individuals absorbed another $162.1 billion.

These costs don’t just hit large companies. They filter directly into the premiums families and small businesses pay every month.

The Explosion of Nuclear Verdicts

Lawsuits are not only more frequent—they’re also becoming dramatically more severe.

• The median “nuclear verdict” (jury awards over $10M) more than doubled recently, climbing from $21 million to $44 million.

• In some categories, claims filings have increased anywhere from 30% to nearly 100% in a single year.

When verdicts hit these extremes, insurers respond the only way they can: by raising premiums, limiting capacity, or exiting markets entirely.

The Business of Lawsuits: Advertising & Outside Investors

Two trends highlighted in the toolkit show how industrialized the lawsuit business has become:

1. Wall-to-Wall Advertising

• Trial lawyers spent $2.5 billion on ads in 2024 and ran nearly 27 million commercials encouraging consumers to sue.

• This creates the perception that every incident requires a lawsuit, even when a claim could be resolved quickly and fairly through normal insurance processes.

2. Third-Party Litigation Financing (TPLF)

Investors—sometimes foreign entities—now bankroll lawsuits in exchange for a portion of settlements.

• Over $16.1 billion in active litigation funding is currently at play.

• The average investment per case: $8 million.

• In some real examples, plaintiffs took advances of $18,000 and ended up owing over $33,000 just months later due to extreme interest rates.

The incentives here are clear: delay, inflate, and drag cases out, because the financiers and attorneys profit long before the injured party does.

Why This Matters for Cary, Apex, Raleigh, and Surrounding Communities

When the legal system is abused:

• Coverage becomes more expensive.

• Fewer carriers are willing to write certain types of risks.

• Claims take longer to settle.

• Small businesses and homeowners are forced into higher deductibles or limited options.

• Families end up paying more even when they’ve never filed a claim.

This trend affects homeowners, drivers, contractors, retailers, HOAs, nonprofits—everyone.

What We Can Do as a Community

Independent agents like myself aren’t just here to quote insurance—we serve as educators and advocates.

Here’s how we can work together:

1. Promote Education & Transparency

Most consumers don’t realize how legal system abuse impacts premiums. By starting the conversation, we reduce confusion and frustration.

2. Encourage Smart Claims Practices

Not every incident needs to begin with “Call a lawyer.”
Sometimes the best first step is simply contacting your agent so we can walk you through coverage, next steps, and how to avoid unnecessary legal escalation.

3. Support Sensible Legal Reforms

There is active federal work happening—such as the Protecting Our Courts from Foreign Manipulation Act—aimed at increasing transparency around litigation financing. Legal-System-Abuse-Toolkit-Full…
Community voices matter. Chambers, business associations, and civic leaders can help drive balanced reforms.

4. Advocate for Fairness, Not Elimination

People deserve justice when they’re harmed.
This isn’t about limiting legitimate claims—it’s about reducing predatory tactics that harm everyone, including genuine victims.

A Balanced System Benefits Us All

Legal system abuse is not a theoretical problem—it’s a real, measurable driver of rising insurance costs in North Carolina. If we want a healthy, competitive insurance market with stable premiums and strong options, we need a legal system that works as intended: fair, transparent, and focused on real harm—not manufactured windfalls.

My commitment as a local agent, community advocate and Chamber member is to continue educating, advocating, and supporting families and businesses here at home. If you ever want to talk through your coverage or understand how these trends impact your policy, I’m always here to help.

— Will Cheek
WBC Risk Partners
Member, Cary Chamber of Commerce