Lex Machina’s First Annual Insurance Litigation Report Reveals Distinct Case Filing Trends

Automobile Claims Up 39% From 2009-2017 While Uninsured/Underinsured Motorist Claims Double;
Life Insurance Claims Fell 20%; Homeowner Claims Rose 80%, Hidden By Hurricane-Related Claims

Menlo Park, CA — October 9, 2018 Lex Machina, a LexisNexis company and creator of the award-winning Legal Analytics® platform, today announced the release of its first annual Insurance Litigation Report, which encompasses data on more than 93,000 insurance cases pending in federal court since 2009 — the third-largest case set on the Legal Analytics platform.

The Insurance Litigation report showcases data and trends involving disputes between an insurer and a policyholder, a beneficiary, or another insurer asserting the rights of a policyholder. The report includes analytics from both the broad Insurance data set as well as five common insurance types: Automobile, Homeowners, Life, Uninsured/Underinsured Motorists (UM/UIM) and Business Liability.

The report shows that insurance case filings have remained relatively steady from 2009 to 2017 (down 8.6%), while certain policy types showed distinct filing trends:

  • Automobile case filings increased 39% during this time period while UM/UIM filings doubled. These increases are likely due to increasing medical costs related to these claims, which enabled them to meet Federal Court jurisdictional requirements.
  • Cases involving homeowner insurance claims fluctuated widely during 2009 to 2017, with large peaks caused by hurricanes Ike (2008) and Sandy (2013). However, even when hurricane-related claims are removed, non-hurricane related homeowner case filings grew more than 90% in this time period.
  • Life insurance policy claims decreased substantially (20%) during this period, despite a 14% increase in 2017.
  • Other case filings (outside of those mentioned above), including commercial property, disability, long-term care, and other types of specialty coverage, increased by nearly 25% since 2009.

The data also showed that findings and case resolutions undoubtedly favor insurers, with defendants gaining favorable judgments in 80% of cases relating to the insurer’s Duty to Defend, 85% of cases involving Duty to Indemnify, and more than 90% in cases relating to Bad Faith. Findings of Bad Faith are very rare, but when they do occur, they do not correlate with a windfall of damages. In looking at damages awards in cases with findings of Bad Faith from 2009 to Q2 of 2018, the damage awards in these cases fluctuate widely with no evident upward or downward trend.

In life insurance cases, defendants prevailed nearly five times more than claimants (11.5% vs. 2.4%), with two-thirds of claim defendant wins occurring at summary judgement. In business liability cases, only about 20% cases resulted in a decision on the merits, with claim defendants prevailing three times more often than claimants (15% vs. 5%). However, in cases that went to trial, claimants prevailed more than 55% of the time.

“The insurance industry has long relied on data analytics to evaluate risks, establish premiums, and evaluate performance. It is fitting that data analytics is now available for insurance litigation,” said Ron Porter, Legal Data Expert at Lex Machina. “The Insurance Litigation Report illustrates how essential analytics is for decision-making. For instance, without the ability to remove hurricane data from the equation, spikes in hurricane-related case filings might have masked an otherwise huge increase in non-hurricane homeowner case filings.”

The report notes that four of the top five jurisdictions with the highest number of insurance cases are in Texas, Louisiana, and Florida, primarily due to the high volume of hurricane-related cases. Similarly, four of the top five judges overseeing insurance cases are in the Middle District of Louisiana, and the fifth in Texas. When hurricane data is removed, the leading jurisdictions shift dramatically – further highlighting the power of analytics for venue selection.

In addition, the report also compares variations in insurance case timings in four major metropolitan areas: the Southern District of Texas (S.D. Tex.), the Central District of California (C.D. Cal.), the Northern District of Illinois (N.D. Ill.), and the Southern District of New York (S.D.N.Y.). C.D. Cal had the fastest median times to reach summary judgment (343 days) and trial (493 days). In contrast, S.D. Tex. had the longest median time to trial (672 days) but the shortest median time to termination (207 days).

To request a copy of the full report, please register here

About Lex Machina
Lex Machina’s award-winning Legal Analytics® platform is a new category of legal technology that fundamentally changes how companies and law firms compete in the business and practice of law. Delivered as Software-as a-Service, Lex Machina provides strategic insights on judges, lawyers, parties, and more, mined from millions of pages of legal information. This allows law firms and companies to predict the behaviors and outcomes that different legal strategies will produce, enabling them to win cases and close business.

Lex Machina’s Legal Analytics was named “Best Legal Analytics” by readers of The Recorder in 2014, 2015 and 2016, and received the “Best New Product of the Year” award in 2015 from the American Association of Law Libraries. The company was named a “Legal A.I. Leader” by The National Law Journal in 2018.

Based in Silicon Valley, Lex Machina is part of LexisNexis, a leading information provider and a pioneer in delivering trusted legal content and insights through innovative research and productivity solutions, supporting the needs of legal professionals at every step of their workflow. By harnessing the power of Big Data, LexisNexis provides legal professionals with essential information and insights derived from an unmatched collection of legal and news content—fueling productivity, confidence, and better outcomes. For more information, please visit www.lexmachina.com.

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