Triple-I: State Lawmakers Move to Regulate Third-Party Litigation Funding

Business Wire

MALVERN, Pa.--(BUSINESS WIRE)--
More than 20 states have enacted laws regulating third-party litigation funding (TPLF) disclosure, according to a new members-only Issues Brief from the Insurance Information Institute (Triple-I). State of the Issue: Third-Party Litigation Funding examines why lawmakers are acting and how litigation finance negatively impacts insurance costs.

“Litigation funding has operated in the shadows for too long,” said Sean Kevelighan, CEO of Triple-I. “When courts, defendants and the public can’t identify who is financing a lawsuit, it is difficult to understand how that money influences outcomes, and ultimately what consumers pay for insurance.”

Issues Brief Highlights

State action: North Carolina’s HB 315 bans litigation investment outright and authorizes civil penalties of up to $50,000 per violation, the first state to take this decisive action. Other states, including Ohio (HB 105), Mississippi (SB 2747), Tennessee (HB 2108), and Utah (HB 280) also implemented laws this year requiring funder registration or disclosure, restricting foreign-entity funding, and limiting funder control of litigation.
Federal proposals: The Litigation Funding Transparency Act was introduced in Congress in February 2026 but has not moved forward. In March, the U.S. Chamber Institute for Legal Reform and Lawyers for Civil Justice petitioned the Federal Civil Rules Advisory Committee for a uniform disclosure standard, backed by more than 200 major U.S. companies, including dozens of insurers. The proposal awaits potential deliberation at the committee’s Oct. 21 meeting.
Federal courts: The Western District of Louisiana instituted a standing disclosure order in September 2026 regarding litigation funding disclosure, but most federal judges are still deciding the issue case by case.
Nuclear verdicts: Awards exceeding $10 million reached a record $25.6 billion across 190 cases in 2025, according to Marathon Strategies.
Economic impact: A Triple-I and Casualty Actuarial Society analysis estimated legal system abuse trends, including litigation funding, added $231.6 billion to $281.2 billion to liability insurance losses over the past decade.
Market size: Swiss Re estimated the global TPLF market at roughly $17 billion, with annual investments projected to reach $31 billion by 2028.
Florida success: After 2022 and 2023 legal system reforms, property insurance rate changes averaged -1.7% through June 30, 2026, and 51 of 67 counties saw average premium decreases in the first half of the year. Homeowners insurer defense costs in the Sunshine State fell from 8.4% of premium in 2022 to 1.9% in 2025. However, the state legislature has not moved forward on proposed TPLF legislation.

“Florida shows addressing legal system abuse can deliver real results for policyholders,” Kevelighan said. “Transparency in litigation funding is the logical next step. States that act now will help keep litigation fair, predictable and free from undue outside influence.”

About the Insurance Information Institute (Triple-I)

Since 1960, the Insurance Information Institute (Triple-I®) has been the trusted voice of risk and insurance, delivering unique, data-driven insights to educate, elevate and connect consumers, industry professionals, policymakers, and the media. An affiliate of The Institutes®, Triple-I represents a diverse membership accounting for nearly 50% of all U.S. property/casualty premiums written. Our members include mutual and stock companies, personal and commercial lines, primary insurers and reinsurers – serving regional, national and global markets.

About The Institutes

The Institutes® are a not-for-profit dedicated to helping people and organizations succeed in the essential disciplines of risk management and insurance. Through numerous affiliated business units and brands, we educate, elevate, and connect students, professionals, and organizations by equipping them with the knowledge, skills, and collaboration they need to tackle the most complex risk management and insurance challenges. Backed by more than 115 years as a trusted knowledge partner, we empower people and organizations to create a more resilient world.