NICB Warns of Fraud Facilitated by Third-Party Litigation Funding, Calls for Transparency and Insurance Industry Vigilance

New Joint Analysis with 4WARN ^®  Shows Nearly 600 Insurance Companies Targeted by Digital Opportunists

OAK BROOK, Ill., Nov. 19, 2025 /PRNewswire/ -- New analysis conducted by the National Insurance Crime Bureau (NICB) and 4WARN has uncovered a strong connection between third-party litigation funding (TPLF) and excessive litigation instigated by fraudulent digital tactics.

The activity undermines the insurance industry, causes premiums to rise, and puts unfair strain on policyholders. In one case, a single funder supported 13 law firms that unethically targeted 66 different insurers to drive claims litigation and maximize the investor's return.

NICB is the nation's premier non-profit organization dedicated to combating insurance crime and fraud, and 4WARN is a digital risk intelligence company. The partners assessed 783 insurance companies from June through August 2025, determining that three in four had been directly targeted by opportunistic litigation-related marketing campaigns backed by third-party litigation funders. The assessment documents ways that TPLF can facilitate or encourage fraudulent insurance claims and unethically drive litigation volume that fails to help policyholders. 

TPLF involves outside investors and entities – including both domestic and foreign sources - providing financial resources for claimants and/or law firms in exchange for a portion of any settlement. In some cases, the outside investor may influence case selection, litigation strategy, and settlement posture to maximize return on investment. At its worst, TPLF-facilitated fraud involves outside investors secretly funding litigation that is based entirely on exaggerated, fraudulent, and even fictitious insurance claims.

Since NICB's direct assistance in investigating the United States v. Constantine case—a $31 million trip-and-fall insurance fraud scheme facilitated by TPLF that preyed upon the poor and homeless—NICB has documented the influence of outside funding on driving claims and insurance litigation. Coordinated networks of unethical lawyers and medical providers facilitate these fraud schemes, which are often exacerbated through digital marketing tactics to drive mass litigation. 

"The sheer scope and impact of outside funding in driving insurance claims litigation is even greater than previously suspected," said NICB President and Chief Executive Officer David J. Glawe. "Excessive litigation and insurance fraud schemes facilitated by third-party litigation funding continue to evolve with more funding pouring in and further aggressive targeting and manipulation of unsuspecting consumers."

"Once again, we have found evidence of funders targeting insurers and initiating questionable lawsuits within the digital ecosystem," said 4WARN Chief Executive Officer Todd Kozikowski. "Fraudulent third-party litigation creates a high-risk environment where digital opportunists use sophisticated online tools, automation, and large-scale targeting campaigns to deceive plaintiffs and make their activity appear legitimate." 

The assessment shows that outside funders who invest in excessive and opportunistic litigation specifically targeted U.S. insurance companies at significant scale. Key takeaways from the analysis have been made public to raise awareness of the issue:  

• 74% (or 585) of the 783 insurance companies assessed were directly targeted by opportunistic litigation-related marketing campaigns, many of which were resourced by outside funders.
• Digital manipulation methods used in TPLF-facilitated fraud include search engine diversion, brand impersonation through cloned portals and misleading domains, and AI-generated content that serves to inflate insurance litigation and/or profit from exaggerated claims.
• A direct correlation exists between legitimate law firm advertising and SEO activity, but the assessment also identified a separate class of fraudulent digital campaigns that exploit those same channels to drive mass litigation.
• Schemes often include "runners" who coach, recruit and coordinate plaintiffs, law firms, complicit medical providers, and digital marketing firms.

Additionally, the assessment calls on lawmakers to adopt pro-transparency reforms to help reveal funding sources and combat the improper incentives that attract fraudsters. While state legislative bodies have begun to adopt reforms to increase TPLF transparency and accountability, more must be done at the state and federal level to shed light on funders and their impact on the insurance industry, consumers, and costs for all.

NICB also encourages the insurance industry to increase its vigilance in identifying and reporting indicators of TPLF-facilitated fraud by calling 1-800-TEL-NICB.

"Our initial findings help reveal the threat of TPLF-facilitated fraud on the industry, but that picture will only become clearer as lawmakers adopt TPLF disclosure obligations and insurance carriers continue to diligently flag questionable claims that contain TPLF indicators," Glawe continued. "Reliable intelligence will help us ensure our ecosystem stays ahead of the threat." 

Insurance companies can enhance their vigilance against the threat of excessive lawsuits and TPLF-facilitated fraud by:

• Expanding their monitoring of digital campaigns, fake sites and brand impersonations
• Tracking suspicious activity related to mass litigation tactics
• Investigating any known opportunists and tracking suspected opportunistic activity to identify patterns
• Supporting TPLF transparency and reform efforts
• Sharing all insights with NICB

About the National Insurance Crime Bureau
Headquartered in Oak Brook, Ill., the National Insurance Crime Bureau (NICB) is the nation's leading not-for-profit organization exclusively dedicated to combatting and preventing insurance crime through Intelligence, Analytics, and Operations; Education and Crime Prevention; and Strategy, Policy, and Advocacy. NICB is supported by more than 1,200 property and casualty insurance companies and self-insured organizations. To learn more, visit NICB.org.

About 4WARN
4WARN is a digital risk intelligence company that helps insurers detect and disrupt tech-enabled claim instigation before it escalates. Using proprietary analytics, large-scale digital surveillance, and expert investigation, 4WARN identifies coordinated online activity, opportunistic targeting, and emerging litigation risks that traditional tools cannot see. Insurance carriers, regulators, and reinsurers rely on 4WARN to protect their portfolios, policyholders, and reputations from digital opportunists. To learn more, visit 4WARN.com.

SOURCE National Insurance Crime Bureau (NICB)