Trending Now
Commercial

How Litigation Funding Can Benefit Insurers in Subrogation and Reinsurance Claims

The business of Insurance is a complex one, full of costly legal pitfalls. This is especially true within two core components of the Insurance industry: subrogation and reinsurance. Fortunately, litigation funding provides an antidote to Insurance companies who may find themselves embroiled in legal turmoil stemming from either practice.

As noted on IMF Bentham’s website, subrogation is the act of recoupment by an Insurance company of their payment to a policy holder. The Insurance company may be on the hook to the policy holder, but can attempt to recoup their policy payout by suing the allegedly liable party. So for example, if a homeowner declares property damage, the Insurance company will pay out the requisite amount as stated in the policy, but assuming a third party is liable for that property damage, the Insurance company may pursue legal action against the third party to recoup their payout.

It goes without saying that subrogation is fraught with risk. The third party may be impecunious, therefore making collectability an issue. And there is always the risk that the litigation will go awry, despite the underlying merits. This is where litigation finance comes in. By its very nature, litigation finance mitigates risk, and in this instance allows the Insurance company to pursue meritorious subrogation claims. Similarly, funders can partner with contingency-fee law firms who take on subrogation claims from large Insurance providers on a portfolio basis, thus mitigating the law firm’s risk as well. So there are multiple avenues here where funding can be applied.

Reinsurance involves a similar circumstance. An Insurance provider may take out reinsurance on the policy the company writes (that reinsurance may in turn be reinsured; and on and on…sort of like a ‘Russian Doll’ of insurance policies). The higher the number of reinsurances, the more likely a conflict over who is liable for the payout.

Reinsurance litigation is essentially a breach of contract claim, except given the complexity, it is often decided by a judge, rather than a jury. As with subrogation, litigation finance provides certainty that legal costs will not encumber the plaintiff and ensure them access to justice.

So for any Insurance company – or law firm with a portfolio of subrogation or reinsurance claims – litigation finance is a helpful tool worth considering.

Commercial

View All
Commercial Deals

Palisade, Accredited Specialty Secure $35 Million Legal Risk Cover

By John Freund |

Specialty managing general underwriter Palisade Insurance Partners has taken a significant step to scale its fast-growing contingent-legal-risk book, striking a delegated-authority agreement with Accredited Specialty Insurance Company that enables up to $35 million in coverage for legal risk insurance products. The New York-headquartered MGU can now offer larger wraps for judgment preservation, adverse-appeal and similar exposures—coverages that corporates, private-equity sponsors and law firms increasingly use to de-risk litigation and unlock financing.

An article in Business Insurance reports that the deal provides Palisade's clients with the comfort of carrier balance-sheet strength while allowing the insurer to expand its program portfolio. The capacity tops up Palisade’s existing relationships and arrives at a time when several traditional markets have retrenched from contingent legal risk after absorbing a spate of outsized verdicts, leaving many complex disputes under-served.

Palisade leadership said demand for robust limits has “never been stronger,” driven by M&A transactions that hinge on successful appeals, fund-level financings that need portfolio hedges, and secondary trading of mature judgments. Writing on LinkedIn, Palisade President John McNally stated: "Accredited's partnership expands Palisade's ability to transfer litigation exposures and help facilitate transactional and financing outcomes for its corporate, law firm, investment manager and M&A clients."

The new facility aligns the MGU’s maximum line with those of higher-profile peers and could see Palisade participate in single-event placements that have historically defaulted to the London market. For Accredited, the move diversifies its program roster and positions the insurer to capture premium in a niche with attractive economics—provided underwriting discipline holds.

Commercial Regulatory Issues

Omni Bridgeway Maps Recovery Paths for PRC Creditors

By John Freund |

China’s ballooning stock of non-performing loans (NPLs) has long frustrated mainland banks and asset-management companies eager to claw back value from defaulted borrowers scattered across multiple jurisdictions. In its newly released 2025 Report on International Asset Recovery for PRC Financial Creditors, Omni Bridgeway distills the lessons of a growing body of cross-border enforcement actions and sets out a playbook for creditors determined to follow the money.

A paper published by Omni Bridgeway explains that the three-chapter study surveys today’s enforcement landscape, highlights “funded recovery” strategies for domestic institutions, and walks readers through case studies in which Chinese lenders have traced assets into offshore havens and employed Mareva-style injunctions, arbitral award assignments, and insolvency proceedings to compel payment.

The paper highlights how litigation finance can transform the economics of pursuing stubborn debtors. By underwriting investigative costs, securing local counsel, and bridging timing gaps between enforcement wins and cash realisation, funders such as Omni Bridgeway can turn an otherwise write-off-prone claim into a profitable workout.

The report also charts structural shifts reshaping the market: Beijing’s pressure on state banks to clean balance sheets, private-equity appetite for “special situations” paper, and widening acceptance of third-party funding in arbitration hubs from Hong Kong to Singapore. A series of recent matters—ranging from a Guangzhou lender’s successful freeze of UK real estate to a provincial AMC’s recovery of Latin-American mining assets—illustrate the potency of coordinated tracing, injunctive relief, and securitised claims sales.

For the legal-funding bar, the study underscores a powerful, still-underexploited pipeline: hundreds of billions of renminbi in distressed credit looking for capital-efficient enforcement solutions. Whether PRC banks will embrace external funders at scale—and how regulators will view foreign-backed recovery campaigns—remain pivotal questions for 2025 and beyond.

Commercial Regulatory Issues

Omni Bridgeway Hails U.S. Budget Bill Win

By John Freund |

Omni Bridgeway has sidestepped a potentially painful tax after President Trump signed the FY-25 Budget Bill without the much-debated levy on legal-finance proceeds. The Australian-listed funder, which bankrolls commercial claims on six continents, had warned that the original 40.8 percent surcharge floated in the Senate Finance Committee would depress case economics and chill cross-border capital flows. Instead, the final bill landed on 4 July with zero mention of legal-finance taxation, handing the industry a regulatory reprieve just as U.S. portfolio commitments hit record highs.

Sharecafe notes that Omni Bridgeway credits a rare coalition of plaintiff-side bar groups, access-to-justice NGOs, and chambers-of-commerce allies for persuading lawmakers to drop the proposal. The company says it will elaborate in its 4Q25 report later this month, but stresses that bipartisan recognition of funding’s public-interest role now mirrors supportive reviews in Australia, the EU and the UK.

For funders, the episode underscores two diverging trends: rising U.S. political scrutiny and an equally vocal defense of the asset class from sophisticated investors. Expect lobbying budgets to climb as Congress circles disclosure and tax issues again in 2026, but also expect money to keep flowing—Omni’s stance suggests confidence that regulatory headwinds can be managed without derailing growth.