“Are you being serious?”
Christopher Swift, chair and chief executive officer of The Hartford, was taken aback by a question from an analyst during the company’s second-quarter earnings call about the impact of litigation finance on the insurer’s results.
“It’s showing up in our loss trend, [and] our allocated loss expenses. We’re spending more time and money on something that turned our judicial system into a gambling system. Are you serious?”
The analyst restated the question, explaining to Swift that he is aware that a variety of issues come together to create social inflation. What he wanted the CEO to pin down was the isolated impact of third-party litigation funding, apart from factors such as negative public sentiment and eroding tort reforms.
Swift didn’t have figures to share. But two months earlier, an actuary speaking at the Casualty Actuarial Society’s Seminar on Reinsurance, said the top end of a range of estimates of direct costs that will be paid to funders by casualty insurers is $25 billion over a five-year period (2024-2028).
Mike McComis, a senior manager for EY and a Fellow of the Casualty Actuarial Society, revealed the results of a model developed by his firm last year to measure the impact of litigation funders, using some information from funders’ reports about annual returns and a variet…