3rd-Party Litigation Funding, Federal Regs Among Insurance Trades’ Priorities for 2025

This story has been corrected to include the correct year in the headline.

Insurance trade organizations are always working for the industry so Insurance Journal asked them: What are the top priorities and/or challenges heading into 2025?

Here are the responses we received:

David A. Sampson, president and CEO, American Property Casualty Insurers Association

In the coming year, APCIA remains focused on working to address the factors that impact insurance affordability and availability; most notably, government risk and other man-made factors that impede competitive insurance markets from providing the widest range of price and product options to consumers. Our efforts will emphasize increased education to promote awareness and understanding of the property-casualty insurance role.

Curbing rampant legal system abuse remains the top APCIA priority for 2025, building on 2024 reform efforts. While the issues driving legal abuse are numerous, the growth of third-party investment and funding of U.S. litigation – particularly in intellectual property litigation – has been alarming and has highlighted the need for transparency and disclosure of who is profiting from judicial outcomes. Litigation is becoming more expensive and more prevalent, with the injured party’s percentage of recovery declining as lawsuits are financed by outside parties. It’s fair to ask whether truth and justice are being replaced by profit motive.

Likewise, another priority for 2025 is to preserve insurers’ use of risk-based pricing and related tools while ensuring that regulation focuses on market conduct and financial solvency oversight, rather than government intrusion that hinders the development of private competitive markets. At the federal level, as the tax debate heats up, APCIA will be engaged to ensure that the taxation structure reflects the property-casualty insurance business model.

Other priority areas include allowing innovations like artificial intelligence (AI) and cyber security defense services to evolve with appropriate oversight to grow private markets; promoting resilience, sustainability, and risk mitigation for natural catastrophes; addressing auto insurance cost drivers (including the impact of potential tariffs); maintaining a sound state-based workers compensation insurance system; and growing foreign market access and competitive standards for our members, among other issues.

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Brady Kelley, executive director, Wholesale & Specialty Insurance Association

Following record premium reports for 2023 and midyear 2024 from AM Best and the 15 states with surplus lines stamping offices that report premium data, we anticipate continued growth in the wholesale, specialty and surplus lines market through 2025. For WSIA, on behalf of its members, that highlights the ongoing need to attract new and diverse professionals to careers in this segment of the industry to meet a growing need for talent.

Related to that growth, WSIA will continue offering high-caliber education and professional development programs, networking opportunities, and legislative advocacy to help members build profitable business relationships. Additionally, we will keep promoting the value of the wholesale distribution system to retail agents. WSIA members can craft customized solutions, at no additional cost to the insured, tailored specifically for unique risks.

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National Association of Mutual Insurance Companies

We are primarily focused on advocating solutions to the combined pressures of extreme weather, inflation, and legal system abuse driving up costs for insurers and policyholders. NAMIC will continue pushing for federal mitigation policies, including more grant funding for state and local mitigation projects, to help reduce risks from extreme weather. We will also press lawmakers to reform the third-party litigation funding to provide transparency and stem the abuse of our courts for profit.

Having spent recent years fending off efforts from the Federal Insurance Office, Federal Housing Finance Agency, Consumer Financial Protection Bureau, and others to move the federal government into insurance regulation, NAMIC will also foster conversations about reining in federal agencies and protecting the state-based system.

And with Congress set to take on tax reform in 2025, NAMIC will ensure that lawmakers understand the unique financial structure of insurance and the need to maintain key tax provisions to help companies absorb losses and ensure long-term stability.

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Sean Kevelighan, CEO, Insurance Information Institute

Legal System Abuse is the number one issue for 2025. Fraudulent or unnecessary litigation racks up attorney and court fees that increase costs for insurance operations and policyholder pricing. Industry analysts have attributed rising claim costs to specific litigation trends and practices, such as an increase in outsized verdicts (typically defined as awards exceeding $10 million), claims filing tactics, and third-party funding of lawsuits.

Another issue of importance to the industry is climate risk/resilience/natural catastrophes. Rising global surface temperatures are having an impact. We’re seeing more frequent and severe storms. In addition, more homes and businesses are being built in harm’s way and replacement costs are increasing faster than overall inflation and add to that legal system abuse. Risk transfer is essential, but just one tool in the resilience toolkit alongside risk modeling, technology, public policy, finance and science. We need to drive behavioral change to help people and communities better manage risk and become more resilient.

Artificial intelligence promises to revolutionize the insurance industry, but the path forward is still uncertain. Will property and casualty insurers merely comply with regulations, or will they lead the charge in promoting the ethical use of AI? As the P/C insurance industry taps the speed and efficiency generative AI offers and navigates the practical complexities of the AI toolset, ethical considerations must remain in the foreground. Traditional AI systems recognize patterns in data to make predictions. Generative AI goes beyond predicting – it generates new data as its primary output. As a result, it can support strategy and decision-making through conversational, back-and-forth “prompting” using natural language, rather than complicated, time-consuming coding. A recently published report by Triple-I and SAS, a global leader in data and AI, discusses how insurers are uniquely positioned to advance the conversation for ethical AI – “not just for their own businesses, but for all businesses; not just in a single country, but worldwide.”