Inflation, stagnant policy limits, and rising awards are driving more claims into federal court and increasing exposure for insurers.
According to Lex Machina’s newly released 2025 Tort Filings Litigation Report, tort cases in US federal courts jumped nearly 20% between 2023-2024 compared to the 2021-2022 period.
The report highlighted the widening gap between policy limits and today’s costs of care and living expenses as a driver of rising tort filings.
“Filings are on track to keep growing into 2025,” said Adam Mills Masarek (pictured above left), legal marketing manager at Lex Machina. “Inflation has made it far easier for cases involving property damage, lost wages, or certain injuries to cross the $75,000 jurisdictional threshold for federal diversity cases.”
At the same time, many liability and auto policies were purchased years ago and have not kept pace with inflation. As a result, insurers find themselves unable to fully compensate claimants, who are then turning to litigation to recover uncovered losses.
Ron Porter (pictured above right), legal data expert on product liability at Lex Machina, said: “If your medical or auto coverage isn’t adequate, or if the other party is uninsured, your only real recourse is to sue. We’re seeing this particularly in uninsured motorist cases, where claims for additional benefits are rising.”
This coverage gap, paired with climbing healthcare costs, leaves courts as the venue of last resort, and increasingly, the venue of first choice.
Another factor behind the surge is the rise of so-called “nuclear verdicts” – jury awards over $10 million – which are growing faster than general economic inflation. Multimillion-dollar compensatory and punitive damages have not only grabbed headlines but also encouraged more claimants to take their chances at trial rather than accept pre-suit settlements.
“Combined with attorney advertising such as billboards and online campaigns, it convinces claimants they don’t need to take the insurer’s first offer,” Masarek said.
Litigation funding has further levelled the playing field, covering plaintiffs’ costs through trial and extending cases that insurers once assumed would settle.
“Funding has really changed the game,” Porter said. “These cases are no longer dependent on law firms or individual plaintiffs having the resources to sustain them.”
However, not all tort categories are experiencing growth. Medical malpractice filings have dropped to their lowest levels since 2009, according to Lex Machina. Porter attributed the downturn to both administrative and legislative shifts.
“In federal court, many med-mal cases involve Veterans Administration facilities,” he said. “Recent changes in how the VA processes and settles claims have led to more resolutions before lawsuits are filed. At the same time, state tort reforms over the last decade have made it harder to pursue these cases.”
Interestingly, Lex Machina’s data shows insurers themselves are appearing more frequently as plaintiffs.
The report reveals that major carriers, including State Farm, Allstate, Geico, and Progressive, are among the most active plaintiffs in Federal Tort Claims Act (FTCA) cases, frequently pursuing recovery against the federal government after paying out claims.
“Many of these involve postal vehicles and motor accidents,” said Porter. “Some insurers are very aggressive in pursuing reimbursement, and you can see the variance in how different carriers approach subrogation strategy.”
This trend underscores how insurers are absorbing greater exposure from claimants, while also actively seeking recoveries to offset losses. Insurers are warned to keep a close eye on emerging mass torts, such as cases tied to the Jackson, Mississippi water crisis. Although still a small share of federal filings, mass torts amplified by litigation funding present a significant exposure.
Premises lability is another area of concern. “We’re seeing steady increases (in claims), particularly involving big-box retailers,” Porter said. “Even for companies with self-insurance or high deductibles, that’s an exposure insurers should monitor closely.”
Rising tort filings, larger verdicts, and funding-backed litigation mean greater exposure and more complex claims management for insurers.
With filings trending upward and jury awards changing expectations, insurers will need to recalibrate their subrogation strategies, reassess liability limits, and strengthen litigation management to weather what Lex Machina describes as the “new normal” in tort exposure.
When asked whether these litigation trends are cyclical, both experts pointed to structural factors.
“One structural factor is the federal jurisdictional threshold of $75,000, which hasn’t changed since 1996,” Porter said. “With inflation, damages like medical costs and lost wages routinely exceed that, making it easier to get cases into federal court, where defendants generally prefer to be.
“So, while the number hasn’t changed, inflation has effectively shifted more cases into federal jurisdiction. Combine that with publicity around large verdicts, and you have a more structural trend toward increased tort filings.”
Masarek also highlighted the rise of attorney advertising, litigation funding, and evolving trial strategies such as the “reptile theory,” which frames defendants as threats to community safety.
“Mass torts will remain an area of concern,” Porter said. “Insurers need to identify where they could be vulnerable to large-scale litigation and prepare accordingly.”
