“From supply chain interruptions and shortages to an overwhelming shift to remote work, the pandemic’s effects on individuals and businesses alike have been nothing short of substantial,” Matusewicz and Freeman said. “Nowhere else were these effects clearer than with insurance-related litigation, causing crammed court dockets, trial delays, and an increased volume of cases referred to mediation because of the ability to attend remotely.”
With McKinsey & Company estimating that inflation has increased property and casualty insurer loss costs by $30 billion in 2021, the attorneys offered solutions for accommodating the busy litigation seasons ahead to mitigate risk from the litigation uptick. Namely, mediation is often required before a case goes to trial, leaving less than 1% of cases going to trial, and even though most claims will settle at mediation, claims professionals should prepare as though the claims will go into litigation more often.
The risk is greater in the Sunshine state. “A staggering share of the nation’s insurance litigation is accounted for by Florida, and the state’s recent responses offer a glimpse at other, albeit controversial, efforts to address the trend,” Matusewicz and Freeman said. “In 2019, Florida accounted for ~76% of all homeowners’ property and casualty lawsuits, despite the fact that only 8% of all homeowners’ insurance claims were filed in the state that same year.”
In an attempt to curtail the rise in property and casualty litigation, Florida enacted SB 2D, which limited the award of attorney fees in the assignment of benefits litigation and restricted fee multiplier awards. However, the legislation has contributed to an increase in Florida’s insurance litigation, even causing some insurers to announce plans to withdraw from the state’s insurance market.
Matusewicz and Freeman concluded the article with a look on emerging litigation: cybersecurity and cryptocurrency. “The ever-increasing risk of cybersecurity incidents and emerging threats related to cryptocurrency theft are exacerbating the looming threat of litigation for insurers,” they said. “With no sign of decline, carriers should treat each claim with the expectation that it may be tried to completion, including diligent response, record keeping, investigations and following established procedures carefully from the very beginning.”
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