On March 10, 2026, Lawyers for Civil Justice and the U.S. Chamber’s Institute for Legal Reform filed suggestion 26-CV-8 with the federal Advisory Committee on Civil Rules, asking it to amend Rule 26(a)(1)(A) to require automatic disclosure of third-party litigation funding (TPLF). The committee’s TPLF subcommittee is active, and the Standing Committee took up the file at its June 3 to 4, 2026 meeting. This is a slow judicial rulemaking track, not legislation, but for reserving purposes it is worth watching now.
The proposal would fold funder disclosure into the same initial-disclosure step that already governs insurance policies: a party would identify any non-party with a financial interest in the outcome and produce the operative funding agreement at the outset, subject to privilege protections. Two features matter. First, it reaches every federal civil case, not just the class actions and multidistrict litigation covered by the Grassley bill’s Litigation Funding Transparency Act. Second, because it travels the Rules Enabling Act track, it would apply uniformly across federal courts rather than state by state, unlike the patchwork of state disclosure statutes now in force.
Who it affects
The exposure is concentrated among self-insureds and captives carrying long-tail liability into federal court: commercial auto and trucking fleets running interstate operations, product manufacturers and distributors, and public entities defending civil-rights and institutional claims removed to or filed in federal court. Workers’ compensation, which rarely reaches a federal jury and where funding is uncommon, is largely outside the effect.
The reserve mechanism
This is a severity signal aimed at the tail of the verdict distribution, not the mean, and not frequency. Funding is disproportionately attached to the high-severity outcomes that produce nuclear verdicts: plaintiff-side capital lets a claimant refuse an early settlement and hold out for a jury. Nuclear verdicts (awards of $10 million or more) rose 52% in 2024 to 135 cases totaling $31.3 billion. That severity is what has fed adverse casualty development: the U.S. property and casualty industry booked $15.8 billion in adverse prior-year development on casualty lines in 2024, the highest on record, driven by other liability occurrence, commercial auto, and product liability. Mandatory disclosure does not remove claims; by exposing a funder’s committed capital and recovery hurdle to the defense, it narrows the settlement range and can compress the top decile of severity. The effect runs hardest through excess and umbrella layers, where a single large verdict swings the result and where tail-factor error concentrates.
Where this shows up in your reserves
Look at the large-loss tail factor on your commercial auto bodily injury and general liability triangles, and at case adequacy on open claims sitting in excess and umbrella layers. If disclosure advances and large-verdict severity compresses, the highest development ages are where it would surface first, well before it moves the aggregate.
What this means for your next review
Do not move a tail factor on a proposal that is years from adoption. Do put it on the agenda as a monitored variable. For your next reserve study:
- Ask your actuary how much of your auto liability and public entity reserve sits in excess and umbrella layers exposed to the verdict severity tail.
- Confirm whether your TPLF-related severity assumptions are trending on funded-verdict data or on carrier averages that blend funded and unfunded outcomes.
- Ask your TPA whether open large claims are being flagged for known plaintiff funding, and whether that informs case reserves.
- Watch for one procedural signal: whether the Advisory Committee advances the Rule 26 amendment to publication for public comment. That step, not the filing itself, is when a real change begins to price in.
Sources
- LCJ and ILR Rule 26 suggestion to the Advisory Committee on Civil Rules (26-CV-8)
- Committee on Rules of Practice and Procedure, June 2026 Standing Committee agenda book
- Institute for Legal Reform: LCJ and ILR submit TPLF disclosure proposal to the Advisory Committee
- Insurance Journal: Groups push for federal court rule to disclose litigation funding
- U.S. Courts: proposed amendments published for public comment
- actuary.info: Social Inflation and Litigation Trends 2026