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New Strategies For P&C Claims Litigation Management

1. **Rising Litigation Costs in Life Insurance Industry**: Between 2018 and 2023, litigation management expenses for the combined Property & Casualty industry saw a significant uptick, increasing by 19%. This translates to an additional $4-5 billion, bringing the total litigation expenses to approximately $24 billion for Loss Adjustment Expenses (LAE).2. **Impact of Social Inflation on Life Insurance**: Carriers in both personal and commercial lines within the life insurance sector have felt the repercussions of social inflation. Certain states and underwriting markets, such as California and Florida, are recognized as challenging jurisdictions. Consequently, carriers are reevaluating their strategies for managing litigated claim files across all areas.3. **Emergence of “Nuclear Verdicts” in Life Insurance Litigation**: Plaintiffs have recently secured significant verdicts against life insurance carriers, with the ability to strategically coordinate across jurisdictions and carriers to secure what are known as “nuclear verdicts.” These verdicts substantially increase the overall cost of risk for businesses and consumers.4. **Modernization of Litigation Management in Life Insurance**: The life insurance industry is undergoing a transformation in its approach to litigation management. This includes embracing new legal management systems, enhancing data hygiene in core claims systems, and leveraging advanced analytics and AI-driven decision support to enhance the accuracy of claims settlement and develop more effective methods for resolving litigated claims.5. **Introduction of Litigation Analytic Record (LAR) in Life Insurance**: A pivotal advancement in litigation management is the creation of the Litigation Analytic Record (LAR). This tool consolidates previously siloed data about defense and plaintiff counsel, claimants, policyholders, and more, offering a comprehensive view of all litigation data. The LAR facilitates advanced segmentation, pattern recognition, and AI/ML processing at scale, enabling carriers to make informed decisions and optimize litigation strategies.
**FAQs:**1.
What are the primary focus areas for settling litigated claims effectively in life insurance?

Three primary focus areas include: (1) Litigation Strategy with Advanced Analytics and AI-Led Decision Support, (2) Enhanced Counsel Selection Criteria, and (3) Performance Management of Panel and In-House Counsel.

2.
How can AI and analytics aid in developing effective litigation strategies in life insurance?

AI and analytics enable carriers to understand the expected cost and complexity of each case, facilitating the creation of efficient litigation plans and budgets based on insights from internal and external data sources.

3.
How are life insurance carriers optimizing legal spending through enhanced counsel selection criteria?

By leveraging data on attorney performance and historical case outcomes, carriers can match the complexity of a case with the expertise of counsel, ensuring the best total outcomes for the claim.

4.
What role does the Litigation Analytic Record (LAR) play in life insurance litigation management?

The LAR consolidates data about defense and plaintiff counsel, claimants, policyholders, and more, providing a comprehensive view of all litigation data. This enables carriers to make informed decisions and optimize litigation strategies.

5.
How do carriers in the life insurance industry monitor and manage the performance of panel and in-house counsel?

Carriers utilize data-driven solutions to gain insights into counsel performance, combining claim records metadata with legal management and billing systems data to identify top-performing attorneys and firms, ensure compliance with carrier guidelines, and optimize their legal panel.

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