By Michael A. Mora

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The calendar year 2021 was a record-breaker for insurance lawsuit frequency, according to recent research released by Lex Machina Inc., the Silicon Valley-based SAAS company that helps lawyers pinpoint litigation trends.

The company’s Insurance Litigation Report 2022 includes analysis of federal district and appellate court data and highlights several trends that should be of concern to insurers and their attorneys.

Ron Porter, a legal data expert in product liability at Lex Machina, said in a recent interview that the report spotlights five years of litigation data, from 2017 to 2021. During that period, 2021 accounted for the most federal case filings, nearly 14,800, of any year since 2009, when Lex Machina began tracking the data.

“Overall, insurance litigation is up 47% from 2017 to 2021, which is a substantial increase,” Porter said.

He noted one key caveat about the data: The coronavirus pandemic impacted the data, particularly in business interruption. For example, business interruption cases peaked in 2020, and were 370% higher than the previous high in 2014.

But Porter said there are still long-term trends in hurricane and automotive insurance, for instance, that would affect the bottom line of litigation attorneys. In 2021, 26% of all insurance litigation in federal district courts was hurricane-related, arising from over 3,800 lawsuits. Porter asserted in the report that the filings of these lawsuits were the highest of any year since 2009.

The slideshow above illustrates some of the insurance litigation trends uncovered in Lex Machina’s recent report.

Advice for insurers

“Insurers need to be prepared by increasing resources both in-house and outside counsel to be ready for hurricane season,” Porter said. “The weather is increasingly unpredictable.”

Regarding automotive insurance, there has been a steady increase in cases filed from 2012 to 2021, totaling close to 65%. The report showed that the amount in controversy increasingly met the $75,000 threshold for diversity jurisdiction, explaining, in part, the rise in federal court filings.

State Farm kept busy despite breaking apart its automotive coverage and fire and casualty coverage into two different companies. Both companies were the most active defendants, with over 1,000 cases more than the next most active defendant.

Noteworthy lawsuit trends

Beyond hurricane and automotive litigation, the report showed that the Southern District of Florida had the highest number of insurance case filings with more than 4,080. And juries awarded plaintiff attorneys nationally across all U.S. district courts over $157 million in damages in 123 cases in 2021.

But during the five-year period, approved class action settlements carried most of the damage awards with $657 million, followed by contract damages of $509 million and, later on, attorney fees and costs of $58 million, according to the Lex Machina data.

Meanwhile, federal appellate judges in California had their work cut out for them. The U.S. Court of Appeals for the Ninth Circuit heard the highest number of cases on appeal, with 647 docketed. Nationally, insurance cases that were appealed and received a decision on the merits of the appeal were reversed by federal judges 25% of the time.

The report also included a shoutout that the most active plaintiffs’ law firm was Pandit Law in New Orleans, Louisiana. In contrast, the most active defendants’ law firm was Butler Weihmuller Katz Craig located in Tampa, Florida.

Scott Katz, the managing partner at Butler Weihmuller, Katz Craig, said his law firm was fortunate to hold the accolade. “We appreciate our clients,” Katz said.

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