A report analyzing data from federal insurance cases filed since 2009 found a major upswing in the numbers of such cases over the last several years, and confirms that federal courts are far more likely to rule in favor of insurers than claimants.
The Insurance Litigation Report released by Lex Machina Tuesday sifted data from more than 93,000 insurance cases filed between 2009 and 2017. It reveals a large jump in automobile and uninsured/underinsured motorist claims, which rose by 39 percent and 50 percent, respectively.
There was an even larger spike in homeowner claims, which rose by 80 percent.
Read the report:
Other insurance cases, such as those involving disability, long-term care and commercial property claims, also rose by almost 25 percent.
At the same time, life insurance claims dropped by 20 percent over the same period, the report said.
While claims cases are up, insurers found the courts to be friendly places to handle them, particularly in cases claiming bad faith, which resolved in favor of insurance companies more than 90 percent of the time.
Insurers also emerged victorious in 85 percent of duty to indemnify cases and in 80 percent of duty to defend cases, it said.
The report found there was an upswing in hurricane-related homeowner claims, which spiked dramatically due to natural disasters like Hurricane Ike in 2008 and Hurricane Sandy in 2012.
Four of the five jurisdictions with the highest numbers of such claims are in Florida, Louisiana and Texas, all states which have suffered extensively from hurricanes in recent years, the report said.
Nonetheless, even when hurricane-related claims are removed from consideration, homeowner claim filings increased by more than 90 percent, it said.
Regarding auto and UM cases, it said increasing medical costs “are likely driving the increase in the number of cases involving automobile insurance in the federal courts. As costs increase, more such cases will meet federal court jurisdictional requirements.”
Under federal rules of civil procedure, a case can be removed to federal court if the dispute is between parties in different states and the amount in controversy is more than $75,000.
Insurers were almost five times as likely to win life insurance disputes, and two-thirds of such cases resolved on summary judgment, the report said.
In business liability cases, insurers were three times as likely to prevail than plaintiffs in cases decided pretrial.
“However, in cases that went to trial, claimants prevailed more than 55 percent of the time,” it said.
The report also analyzed the amount of time it took for courts to resolve insurance cases in four major circuits in California, Illinois, New York and Texas.
It found that California’s Central District was the fastest, taking an average of 343 days to rule on summary judgment, and 493 days to get to trial.
Texas’ Southern District was even faster in terminating insurance cases pretrial, taking an average of 207 days. But it was the slowest to reach trial at 672 days.
Lex Machina legal researcher Ron Porter said the analysis should help insurers and attorneys working to dig into data regarding claims disputes.
“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,” said Porter in a statement accompanying the report’s release.