The Insurance Industry’s Double Standard: Calling for Price Caps on Others, Not Themselves

For years, the insurance industry has loudly opposed any attempt to regulate its own pricing practices, yet when it comes to Consumer Legal Funding (CLF), a private, non-recourse transaction that helps injured individuals stay afloat financially while awaiting the resolution of their legal claims, the same insurers suddenly become champions of “rate caps” and “price controls.” This contradiction is not only hypocritical, it’s revealing. Insurers decry CLF as costly to consumers while simultaneously hiking their own premiums at rates far exceeding inflation. The double standard exposes an industry trying to deflect attention from its own excesses by scapegoating a product that empowers consumers rather than exploiting them.

Soaring Premiums and Renewed Talk of Price Controls

As The Wall Street Journal recently reported, (https://www.wsj.com/finance/regulation/runaway-insurance-costs-bring-back-talk-of-price-caps-fe4df279?mod=author_content_page_1_pos_1)insurance premiums for home and auto coverage have skyrocketed, 50% and 42% respectively since 2020, far outpacing the 26% rise in consumer prices. Lawmakers from Illinois to Louisiana are now exploring legislation to cap rates or ban “excessive” premiums. In Louisiana, Governor Jeff Landry has accused insurers of “sending record profits to Wall Street while our rates continue to climb.” Even some Republican policymakers, typically allies of business deregulation, have conceded that the market has spun out of control. Yet, as pressure mounts for oversight, the insurance lobby warns that price caps would destroy competition and drive carriers out of states. Their argument is simple: government shouldn’t interfere with market pricing, but that principle seems to apply only when insurers are the ones setting the prices. When it comes to Consumer Legal Funding, the same voices demand caps, fee limits, and disclosures so invasive they would cripple the industry.

The Hypocrisy of Selective Regulation

The contradiction is glaring. Insurers insist that their pricing should remain a matter of actuarial science and free-market competition, then turn around and lobby for government-mandated caps on what private CLF companies can charge. Consumer Legal Funding isn’t insurance, lending, or a public utility. It’s a voluntary, non-recourse transaction between an individual plaintiff and a funding company. If the plaintiff loses their case, they owe nothing. If they win, the company is repaid from a portion of the settlement. The funds are used for household expenses, rent, groceries, childcare, or medical bills, not legal fees. Yet insurers push for rate ceilings on CLF under the guise of “consumer protection.” They claim these private agreements drive up settlement values, inflate damages, and contribute to what they call a “tort tax,” an alleged hidden cost of litigation that raises prices for everyone. That narrative is false on every level. Consumer Legal Funding doesn’t create lawsuits, doesn’t affect liability verdicts, and doesn’t add costs to insurance premiums. It simply prevents insurers from weaponizing financial pressure to force injured individuals into accepting lowball settlements.

The Real Driver of Costs: Insurer Delay and Denial

If there is a “tort tax” in the civil justice system, it’s one imposed by insurance company delay tactics. Insurers routinely stall, dispute, and underpay claims, knowing that time is their greatest leverage. As weeks turn into months, many plaintiffs, unable to work and facing mounting bills, are forced to settle for far less than their cases are worth. Consumer Legal Funding helps correct that imbalance by giving people financial breathing room. It ensures that cases are resolved on their merits rather than on the plaintiff’s desperation. That’s not inflationary, it’s restorative. In truth, insurers’ animosity toward CLF stems from the fact that it reduces their negotiating power. When consumers can afford to wait for fair compensation, insurers can no longer close claims cheaply. It’s no surprise, then, that they’ve spent years trying to paint CLF as a villain while quietly raking in record profits.

Record Profits, Record Rate Increases

The insurance industry’s financial health tells the story. Despite claiming heavy losses, major carriers continue to post multi-billion-dollar earnings and pay generous dividends to shareholders. State Farm, for example, defended a 27% home-insurance hike in Illinois by citing actuarial “necessity” while admitting it has made money in 13 of the past 15 years. If any industry merits scrutiny for “excessive” pricing, it’s the one that profits while families struggle to pay their monthly premiums. Consumers can’t shop their way out of this crisis, insurers dominate markets, coordinate rate filings, and benefit from a unique exemption from federal antitrust laws dating back to the 1940s. In other words, insurers already enjoy government protection from true competition. Yet they cry foul when policymakers dare to question their rate hikes or when other industries, like CLF, resist government interference.

The insurance industry’s attacks on Consumer Legal Funding are not about protecting consumers, they’re about protecting profits. Through trade groups and front organizations, insurers have spent millions lobbying for restrictive legislation that would cap CLF rates or require disclosure of funding agreements in litigation. 

Weaponizing “Transparency” to Weaken Plaintiffs

The insurance industry’s call for mandatory disclosure of Consumer Legal Funding agreements is part of a broader strategy to tilt the playing field. Under proposed rules in several states, defendants would gain access to details about how much funding a plaintiff has received, the terms of repayment, and even the identity of the funder. Insurers frame these disclosure requirements as “sunlight” reforms, measures designed to protect the integrity of litigation. In practice, they’re tools of intimidation. With that information, defense attorneys can time lowball offers or drag out discovery to increase financial pressure on plaintiffs, knowing exactly when their resources might run out. This isn’t transparency in the service of justice, it’s transparency as a weapon. By contrast, insurers fiercely protect their own financial secrecy. They refuse to disclose the billions they hold in reinsurance agreements, which allow them to spread risk globally and obscure true profit margins. They guard their claims reserves, the internal estimates that determine how much they expect to pay out, and therefore how much they can safely delay. And they keep confidential their massive defense budgets, funneled to outside law firms that specialize in exhausting plaintiffs through delay and attrition. If transparency truly mattered, insurers would open their own books. Instead, they seek a one-way mirror, plaintiffs are exposed, while insurers remain hidden behind a veil of “proprietary information.” The hypocrisy is unmistakable. Insurers want to know everything about the financial lifeline that allows injured people to survive while waiting for justice, but they reveal nothing about the financial machinery that profits from denying that justice.

The Free Market They Pretend to Defend

David A. Sampson, President of the American Property Casualty Insurance Association, recently lamented in a LinkedIn post (https://www.linkedin.com/posts/david-a-sampson-23a54911_runaway-insurance-costs-bring-back-talk-of-activity-7386111332653223937-2tsL/?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAGWWSgBFESrqDCdnU2Jw-r57mZqFuGuXmQ) that “runaway insurance costs” are fueling talk of government price caps. He warned that rate restrictions would harm the free market and reduce availability of coverage. He’s right about one thing, price controls can distort markets. But what he fails to mention is that insurers have long sought to impose those very controls on Consumer Legal Funding, a product that operates entirely outside the insurance system and poses no risk to public solvency or taxpayer burden. If insurers truly believe in market competition, they should let the market decide the value of Consumer Legal Funding too. Instead, they advocate selective capitalism, deregulation for themselves, regulation for everyone else.

Funding Lives, Not Litigation

Consumer Legal Funding is not the problem, it’s part of the solution. It funds lives, not litigation, helping injured people cover their living expenses while the justice system runs its course. Without CLF, many victims would be forced to accept the first lowball offer insurers put on the table. With it, they can seek fair compensation, hold wrongdoers accountable, and restore balance to an uneven system. That’s not a “tort tax,” it’s access to justice. By contrast, the insurance industry’s soaring rates, opaque pricing, and resistance to oversight impose a very real tax, a premium tax on everyday life. Families across the country are paying hundreds or thousands more each year for coverage that’s less reliable and harder to afford.

Here is The Bottom Line

When insurers complain about rate caps on their own industry, they call it government overreach. When they push for rate caps on Consumer Legal Funding, they call it consumer protection. The inconsistency reveals what’s really at stake, power and profit, not principle. Even the insurance industry’s own leaders acknowledge the dangers of government interference when it affects them. As David Sampson, President of the American Property Casualty Insurance Association, recently wrote on LinkedIn, “Government price controls distort markets and create perverse incentives. Imagine the government telling automakers or builders how much to charge for the cars and homes they make. It’s not a serious solution.”

He’s right, and that same philosophy should apply equally to Consumer Legal Funding. CLF operates in a competitive, private marketplace, where individuals freely choose to engage in non-recourse transactions that help them stay financially stable while pursuing justice. If price controls are misguided and harmful for insurers, then they are equally misguided and harmful when applied to CLF. Those who champion free-market values should apply them equally, giving consumers who rely on Consumer Legal Funding the same liberty to choose that insurers demand for themselves.

Until that happens, efforts to impose disclosure of CLF contracts or artificial rate caps will continue to serve as little more than a diversion from the insurance industry’s own unchecked pricing practices and lack of accountability.

Consumer Legal Funding: Funding Lives, Not Litigation