Arizona’s Supreme Court disclosure rule for third-party litigation funding (TPLF) took effect January 1, 2026, joining Georgia, Colorado, Kansas, Montana, Oklahoma, and Tennessee as the seventh state to require some form of funder transparency in civil cases. Pennsylvania’s Supreme Court is now deliberating a proposed disclosure rule after public comments closed April 22.
For self-insured employers carrying commercial auto and GL retentions across multiple jurisdictions, the seven-state wave creates a concrete reserve segmentation problem: severity development in disclosure states will begin to diverge from severity in states where funders still operate without transparency.
What the laws require
The seven states vary in scope but converge on three features: mandatory disclosure of funder identity, restrictions on funder control of litigation strategy, and prohibitions on foreign-sourced funding.
Georgia’s SB 69, effective January 1, 2026, is the most detailed. Litigation funding agreements involving $25,000 or more are subject to discovery in civil actions. Funders must register with the Department of Banking and Finance, disclose ownership and criminal history, and certify no affiliation with foreign adversaries. Failure to register is a felony carrying up to five years in prison and a $10,000 fine. Funders providing $25,000 or more become jointly and severally liable for sanctions or costs assessed against the funded party.
Arizona’s disclosure rule, adopted by the state Supreme Court, requires disclosure of all TPLF agreements in civil cases and prohibits foreign-influenced funding arrangements. Colorado, Kansas, Montana, Oklahoma, and Tennessee enacted similar laws during their 2025 legislative sessions, with provisions ranging from funder registration obligations to disclosure timing requirements.
Pennsylvania’s Civil Procedural Rules Committee published proposed Rules 213 and 213.1, which would require production of TPLF agreements during discovery in all civil cases. Philadelphia’s Court of Common Pleas ranks among the top five on the American Tort Reform Association’s Judicial Hellholes list, making Pennsylvania’s decision significant for nuclear verdict severity.
Who it affects
Self-insured employers with commercial auto and GL retentions spanning multiple states. The seven disclosure states cover approximately 22% of U.S. tort claim volume. Georgia is one of the nation’s highest-severity jurisdictions for trucking and auto liability verdicts. Self-insured fleets, manufacturers, and hospitality operators with concentrated exposure in these states have the most to gain from early identification of funded cases.
The reserve mechanism
TPLF-funded plaintiffs hold out for larger verdicts because the funder needs a return on its investment. Disclosure allows defendants to identify funded cases earlier, adjust litigation strategy, and set more accurate case reserves. The primary effect is on severity development and expected claim ratios, not frequency.
In a reserve analysis, this surfaces in two places. First, case reserves on open bodily injury claims may be set against a funded-plaintiff negotiation floor that disclosure can lower. Second, the expected loss ratio in a Bornhuetter-Ferguson projection for current and future accident years should begin reflecting the probability that disclosure compresses settlements in the upper severity deciles.
As disclosure states generate settlement data on funded versus unfunded cases, actuaries will have the basis to segment severity assumptions by jurisdiction. That segmentation does not exist yet, which makes the next 12 to 18 months of claims data from Arizona and Georgia the baseline period.
What this means for your next review
Instruct your TPA to add a TPLF indicator field in the claims management system for every state that requires disclosure. You cannot build a funded-versus-unfunded severity dataset if the flag does not exist at the claim level. Ask your actuary whether GL and commercial auto severity development factors should be segmented between disclosure and non-disclosure states, and whether the federal TPLF bill changes the timeline for that segmentation.
Sources
- DLA Piper: Georgia Enacts Sweeping Tort Reform and Litigation Funding Laws
- PA Coalition for Civil Justice Reform: Supreme Court Committee to Consider Proposed TPLF Rule
- Arizona Chamber: Supreme Court Rule Update on Third-Party Litigation Funding
- ATRA: Third-Party Litigation Financing State Law Tracker
- ILR: Lifting the Shadows, Restating the Case for Reforming TPLF