The decision by US broker CAC to establish its contingent risk and litigation insurance business in London is being presented as a sign of confidence in the UK market.

Others may see it differently.

The expansion reflects the rapid growth of an industry built around financing, insuring and commercialising legal disputes. CAC specialises in products such as after-the-event insurance, adverse judgment cover and other policies designed to support litigation and arbitration claims.

London was chosen because the UK has become one of Europe’s most developed markets for litigation funding and litigation-related insurance.

That is not necessarily something to celebrate.

The Financialisation of Litigation

Litigation exists to resolve disputes and provide redress where genuine wrongdoing has occurred.

Increasingly, however, legal claims are becoming financial assets.

Funders finance cases. Brokers arrange specialist cover. Insurers underwrite risk. Law firms pursue claims. Each participant earns a return if litigation proceeds.

The result is a growing market whose commercial success depends on the volume of legal disputes being pursued.

That raises an obvious question: when litigation becomes an industry in its own right, where does the incentive lie?

Fuel for the Class Action Boom

The UK has already experienced a sharp increase in collective actions and large-scale group claims.

Supporters argue that funding and insurance improve access to justice by enabling claimants to bring cases they could not otherwise afford.

Critics counter that removing financial risk inevitably encourages more speculative litigation and increases pressure on defendants to settle, regardless of the underlying merits.

The arrival of additional specialist insurance capacity is likely to reinforce that trend.

Businesses Ultimately Pay

The costs associated with funded litigation do not disappear.

Companies facing major claims often incur substantial legal expenses long before any court reaches a conclusion. Even successful defendants can spend years and millions of pounds defending themselves.

Those costs are ultimately absorbed through higher prices, reduced investment, lower returns and increased insurance premiums.

This is why the growth of litigation finance matters beyond the legal sector. Its effects are felt throughout the wider economy.

Time for Greater Scrutiny

The expansion of litigation insurance is another sign that the UK is becoming a hub for an increasingly sophisticated claims ecosystem.

That may be good news for funders, brokers and claimant firms.

Whether it is good news for the wider economy is less clear.

Access to justice remains a fundamental principle. But policymakers should also consider whether the continued growth of litigation funding and insurance is creating incentives that encourage more disputes rather than more justice.

As new players enter the market, the debate should focus not simply on who can finance claims, but on whether the legal system is drifting towards a model in which litigation itself becomes the product.