RIMS Taking Aim: Rhyme And Reason In Regs, AITC — An NAIC Framework, HarvardLaw — Models

Unlike the proposed framework that would require years and significant effort to develop into a model law, AITC proposes to rely upon states’ existing regulatory authority. AITC has made a rational case for the business and, ultimately, for consumers, in our view.

While on regulatory and social issues, critics of Demotech may have gotten a wake up call, and may wish to issue an apology to the Ohio-based rating company. In 2021 and 2022, a few Demotech-rated carriers, including American Capital Assurance Corporation, rated by them and others, failed, despite consecutive years of favorable actuarial opinions, audits, and “A” ratings. In early 2023, Demotech advised that their research demonstrated that carriers were increasingly litigated against by what they called “tech-enabled litigation instigation,” a previously covert online business model. Demotech was criticized for the failures despite the revelation of an online business model capable of generating litigation on an industrial scale. Today, nearly four years later, the reality is … Demotech was right. The industry lost four years that could have been focused on the undoing of the business model that Demotech’s research discovered.

Wake-up calls were many and alarming for sure. On Nov. 19, 2025, the National Insurance Crime Bureau (NICB)issued a press release based on its research — carriers were being targeted online and litigation funding was investing in the process.

Meanwhile, at Harvard, the course “Litigation Funding, Law Firm Finance, and the Future of the Legal Profession” was over-subscribed. The course description notes that: “Many of the most consequential developments in modern civil litigation are best understood as results of changes in the financing and capitalization of the Bar. The past two decades have seen a global transformation with the emergence, explosive growth, and evolution of a market in legal claims in which lawsuits are bought, sold, and invested in. In this course, we will explore cutting-edge changes in how litigation and law firms are financed and explore their effects on both civil litigation and the global legal profession. The course consists of three units that build on each other: litigation finance, law firm finance, and the future of the legal profession.

“We will explore the body of law governing litigation finance that has emerged in recent years, including court cases and ethics regulation; theoretical questions and approaches; policy implications; the effects of financing on litigation strategy and on the relationships between lawyers and their clients; and the profound changes it has set into motion in the civil justice system as a whole. We will examine how changes in the financing of and trading in lawsuits have morphed into a transformation in the financing of law firms; how the changes in finance may converge with other key developments in the legal profession, such as technological changes, globalization and anti-globalization; how these changes are transforming law firm governance, the landscape of the legal profession — including entrepreneurship in the legal sector — and the careers of lawyers. Finally, we will think through possible ways that the revolution in the financing of lawsuits and law firms might affect the future of the legal profession, including the business models of law firms; the role of lawyers in society; and how society may react and change the regulation of the practice of law.”

Point made.

A warlike industry response is warranted, for real. And not just by Demotech, crying as it has been in a wilderness of relative indifference, or by determined, but passive discourses on association stages, useful though they may be in consciousness raising.

At the Insurance Fraud Management Conference, sponsored by Verisk and NICB, “Social Inflation and Funding Schemes: The New Fraud Frontier” will provide information on how litigation funding impacts social inflation, nuclear verdicts and claimants.

The alternative to a warlike strategy and action is passive acceptance of financial plundering in a kind of judicial roulette wheel of fortune environment, and the eventual remodeling of risk bearers’ budgets, starting soon with claims and moving throughout the structures.

The wolves are being trained … and funded. SA