Demotech Research Demystifies Increased Frequency of Litigation and Social Inflation

Demotech Research Demystifies Increased Frequency of Litigation and Social Inflation

Columbus, Ohio, July 3, 2024:

Joseph Petrelli, President, Demotech, Inc., who authorized and initiated Demotech's ground-breaking research project in March 2022 notes with pride, "Demotech's research, undertaken by Todd Kozikowski, identified the business model that exacerbates many critical issues the insurance industry faces. As private equity, litigation financing, and non-lawyers utilize alternative business structures, permitted in Arizona since 2020, to secure ownership in law firms, tech-enabled claim instigation has emerged as a national, company specific threat."

Todd Kozikowski, Co-founder, CEO, 4WARN shared, "When Joe Petrelli reached out to me regarding the acceleration of contested claims in Florida for several carriers that became impaired, I assumed this was a local weather-induced, geo-centric event. However, investigating the targeting tactics of opportunists led to a nationwide discovery: nearly all insurers and lines of insurance are being targeted. Additionally, the business model of 'tech-enabled claim instigation' was confirmed for the insurance industry as well as nearly every industry. Today, Arizona and other jurisdictions that authorize alternative business structures may be opening the flood gates."

Having initiated the research that discovered tech-enabled claim instigation in March 2022, we have prepared this summary as a primer on the topic of social inflation, nuclear verdicts, and increased claim frequency, and to share preliminary thoughts on litigation financing: https://www.demotech.com/pdfs/dt_releases/Demotech_4Warn_TECI_business_model.pdf.

About Demotech, Inc.

Established in 1985, Demotech, Inc. is a financial analysis firm located in Columbus, Ohio. Demotech provides objective and independent Financial Stability Ratings® (FSRs) for Property & Casualty insurance companies, Life & Health insurance companies, and Title underwriters, among others. As the first company to have its rating process formally reviewed and accepted by Fannie Mae, Freddie Mac, and HUD, Demotech has been leveling the playing field by offering FSRs to insurers of all sizes. As of July 11, 2022, Demotech is registered with the U.S. Securities and Exchange Commission as a nationally recognized statistical rating organization (NRSRO) in the class of ratings for insurance companies. Visit www.demotech.com for additional information.

About 4WARN, Inc.

4WARNis an analytics and services organization delivering the first risk intelligence data to identify, assess, and mitigate litigation targeting and claims instigation. Our solutions are used by insurers, MGAs, reinsurers, transportation and logistics companies, and departments of insurance to evaluate litigation risks. As a team of insurance and analytics experts, 4WARN is dedicated to raising awareness and analyzing tech-enabled claims and litigation. Leveraging billions of data points, we monitor, track, report, educate, advocate, and empower organizations with data-driven insights to regain control of client interactions. Visit www.4WARN.com for additional information.