Third-party litigation funding and insurance: why should you care?

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Publié le 26/11/2025 par Jérôme Goy

INSURANCE LAW

According to the INRS (French National Research and Safety Institute), 70% of companies that suffer a major disaster disappear within months, demonstrating the scale of the economic consequences (1). This means that compensation for a company by its insurer is therefore a vital and often urgent necessity for the company’s survival.

The Covid-19 crisis, for example, has shown that rapid compensation can prevent bankruptcies or receiverships.

However, when it comes to insurance, two essential elements immediately come to mind:

• Acquiring coverage in principle (legal aspect): it is not enough to sign a contract; the coverage must also be effectively acquired and applicable to the claim.

• Proof and determination of the damage: in order to obtain compensation (technical and legal aspect), it is often necessary to resort to a legal expert opinion, which will enable the material and immaterial damage and operating losses to be precisely quantified. This expertise is technical, often lengthy and costly, requiring specialized experts capable of determining the actual extent of the damage and documenting the insurer’s contestable positions (exclusions, deductions, sub-limits).

However, a company already in difficulty immediately faces a liquidity problem and therefore a problem financing its litigation against its insurer. Between slow assessments, restrictive positions, and largely insufficient compensation proposals, it risks seeing its cash flow deteriorate rapidly, compromising its ability to continue the lawsuit, maintain its business, and ultimately ensure its survival.

While the assessment of a claim is often lengthy, complex, and technical, it is important to bear in mind the significant sums at stake. Major fires can result in compensation payments of tens or hundreds of millions of euros.

The combination of these factors—the vital need for compensation, the complexity of expert assessments, and the amounts at stake—may therefore be a reason for these companies to turn to third-party litigation funding. In some cases, this mechanism allows the company to pursue legal action without straining its cash flow, while maximizing its chances of obtaining fair and full compensation. It is beginning to develop in France, with insurance likely to be one of its natural areas of growth.

For more on this topic, see my previous articles:

• Third-party funding of litigation, class actions, and insurance: at last (some) news published on July 9, 2025. URL : https://www.enthemis.com/en/third-party-funding-of-litigation-class-actions-insurance-at-last-some-news/
• The penalty system for conflicts of interest in third-party litigation financing published on September 9, 2025. URL: https://www.enthemis.com/en/the-penalty-system-for-conflicts-of-interest-in-third-party-litigation-funding/