Missourians are being warned about growing pressure on the state’s insurance market.
The Missouri Department of Commerce and Insurance says lawsuit abuse is driving up costs, with Director Angela Nelson warned it now amounts to a tort tax of more than $1,200 a year per person.
“I believe they estimated it somewhere around $3,400, I think, for a family,” said Nelson. “And so it is very real consequences that folks are paying. And again, when the cost of claims go up, that means that the insurance premiums go up.”
Nelson told Missourinet that the report highlights several practices contributing to litigation costs that include third-party litigation funding, where outside investors bankroll lawsuits for a share of the payout.
“In some of the circumstances, those entities that are doing third-party funding are sometimes being financed by foreign governments,” said Nelson. “And so, in some instances, there is a belief that this litigation could be used as an economic weapon against our country.”
Nelson said her office is hearing from more consumers who are struggling to find coverage and facing sharp rate increases.
“My fear is that if these patterns continue, the average individual is going to continue to see those cost pressures in their auto insurance premiums and their homeowner’s insurance premiums,” said Nelson. “We really are having a proliferation of what has been called just lawsuit abuse.”
Nelson said unless changes are enacted, lawsuit abuse will keep raising insurance costs for Missourians, with additional findings on the full impact still ahead.
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