AI Is Making Litigation Profitable at Smaller Claim Sizes

U.S. commercial auto liability direct written premium rose 12.3% to just over $43 billion in 2024, Milliman found, based on a composite of 40 major insurers representing nearly 80% of industry volume.

Despite that premium growth, the broader commercial auto line posted a $4.9 billion underwriting loss in 2024, the 14th consecutive year of losses, AM Best found. Rate increases have not closed that gap, and generative artificial intelligence is now widening it from the other direction by making it cheaper for plaintiff firms to build cases that previously would not have justified the legal expense.

Ratings agency Demotech and digital risk firm 4WARN have studied how that shift is playing out in trucking specifically, Insurance Business reported. Demotech’s Joseph Petrelli said plaintiff attorneys see an 18-wheeler not as a vehicle but as a $2 million insurance policy, since commercial trucking carries mandatory coverage limits that make every crash a guaranteed payout target. An analysis of 56 plaintiff law firms targeting transportation claims found they spent more than $228 million annually on paid search advertising, with about 88% of those firms actively running paid campaigns. Those figures come from 4WARN’s own proprietary analysis that Insurance Business reported.

AI Cuts the Cost of Building a Litigation Case

Plaintiff firms are using AI not only to identify potential clients but to flag which cases are most likely to produce a nuclear verdict, and then concentrate resources on those cases, Ashley Fetyko, a senior partner at insurance defense firm Tyson & Mendes, told Insurance Business. The contingency-fee model drives that behavior. Firms collecting a share of any award are highly motivated to pursue the cases AI flags as likely to go nuclear, Fetyko said.

The National Law Review, as covered by PYMNTS, projected that by the end of 2026, litigation intelligence will operate as continuous, predictive infrastructure, determining whether to file a claim, where to file it, when to settle, and for how much, in near real time. Bloomberg Law has projected the global litigation funding market could grow to nearly $50 billion by the mid-2030s, When AI lowers the cost of scoring and building a case, the minimum claim size needed to make litigation worthwhile falls with it.

Defense Firms Lag Plaintiffs in Adopting Litigation AI

The plaintiffs’ bar has consistently been quicker to adopt new tools than the defense, and AI has stretched that lead further, Fetyko said. “If the plaintiffs’ bar knows which cases are likely to go nuclear, why doesn’t the defense?” she said. “The technology certainly exists. The defense simply isn’t making full use of it.”

Mark Gallagher, who leads the national transportation practice at Risk Placement Services, has noted that underwriters have tightened expectations around claims reporting, with many insurers now emphasizing same-day notification directly to the carrier. Faster reporting lets an insurer investigate quickly and document the scene before litigation accelerates, Insurance Business reported.

AM Best found that the loss and defense-cost ratio for commercial auto liability hit 87.6 in 2024, the highest in 11 years, even before accounting for any additional claims AI-driven case sourcing brings into the pipeline, Risk&Insurance reported. Triple-I noted that excessive injury claims drive more attorney involvement, producing larger settlements and more protracted litigation. AI does not change how often accidents happen. It changes how many of those accidents become lawsuits, and how cheaply each one can be built.

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