How to Lower Legal Expenses, Improve Litigation Outcomes With Analytics - Carrier Management

Thursday, April 8, 2021

Defending lawsuits and managing trials is a major focus area and expense category for insurers—whether they are defending insureds against liability claims or defending themselves in coverage and bad-faith actions. There are many reasons why an involved party may file a lawsuit: impasse during negotiations, lawsuit at first notice of claim, inefficient claim handling, allegations of bad faith, etc. Based on our experience and industry financial data, we find that anywhere from 3-8 percent of direct written premiums are spent on managing litigation. The complexity of issues involved with litigation varies across lines of business. As the underlying risk becomes more complex, we find that the claims in suit percentage increases exponentially.
By Amit Sharma and Upendra Belhe