According to a recent Insurify report, California residents will see a 54% increase in car insurance premiums by the end of 2024, with average annual costs for full coverage projected to reach $2,681—well above the national average increase of 22%. Factors contributing to rising costs include third-party litigation funding (TPLF) and increased attorney advertising, both of which are leading to a more expensive claims environment.
Findings from the Insurance Research Council (IRC) highlight growing public concern over attorney advertising and its impact on auto insurance costs. The IRC’s October 25 report indicates that 60% of respondents believe attorney advertising raises the frequency of auto claims, up from 55% in 2021. Additionally, 52% think it directly increases insurance premiums, compared to 45% in the previous survey.
“Most respondents believe that attorney advertising increases auto insurance costs by encouraging more legal involvement, which leads to higher claim settlements and legal expenses," said Dale Porfilio, President of the Insurance Research Council.
The report also reveals that attorney advertising has become more common, with 89% of Americans recalling seeing attorney ads in the past year—a rise of 8% since 2021. Among those who recently filed auto claims, 62% noticed more attorney advertising, compared to 42% of those without recent claims. The ads primarily focus on auto accident injuries, according to 63% of respondents.
Federal lawmakers attribute part of the cost increase to TPLF. Bankrate describes TPLF as a billion-dollar industry where third parties, including hedge funds, invest in lawsuits for a share of the settlement or award. This practice is seen as contributing to high-cost litigation and longer settlement times.
Experts warn that without regulatory reform to address TPLF and attorney advertising, consumers are likely to face continued premium increases. A report from Research and Markets projects that the global litigation funding investment market will grow at a compound annual growth rate (CAGR) of 11.1% from 2025 to 2037, reaching around USD 60 billion by 2037.