Insurance Litigation Report Shows Business Liability, Business Interruption Cases Were up in 2023

There was an increase in cases involving business liability, business interruption and non-hurricane homeowners policies in 2023 amid an overall drop in insurance cases in 2023, a new report shows.

A report from Lex Machina, a LexisNexis company, examines insurance litigation trends in federal district and appellate courts focusing on the three-year period from 2021 to 2023.

In 2023, 17,654 insurance cases were filed in federal district courts, down 6% from 2022. The drop is a divergence from the upward trend that insurance cases have exhibited since 2016, according to the report.

From 2021 to 2023, the highest number of insurance cases was filed in the Eastern District of Louisiana, while the highest number of insurance appellate cases was docketed in the Ninth Circuit, the report shows.

Most insurance cases terminated in the last three years were either settled or resolved on procedural grounds. However, of those that were resolved on substantive grounds, claim defendants won five times as often as claimants. Claim defendants primarily prevailed on summary judgment, judgment on the pleadings, and default judgment, while claimant wins were primarily on summary judgment or at trial, according to the report.

“For insurance cases that were appealed to a federal appellate court and terminated from 2021 to 2023 with a decision on the merits of the appeal, 21% were ultimately reversed,” the report states. “During the same three-year period, $1.56 billion in total damages were awarded as Approved Class Action Settlements.”

In 2023, $1.2 billion of insurance damages were awarded, above the range of annual insurance damages awarded each year over the past decade of between $150 million to $700 million per year. The report shows the number of cases in which insurance damages were awarded in 2023 was consistent with the other years in the past decade, but the high amount of damages awarded in 2023 was primarily driven by a significant number of large class action settlements related to life insurance policy changes.

The most active defendants in insurance litigation over the three-year period were insurance companies. State Farm Fire and Casualty Co. defended against the highest number of insurance cases (5,833 cases in 79 districts). State Farm Mutual Automobile Insurance Co. was second with 2,138 cases in 78 districts, followed by Allstate Vehicle and Property Insurance Company with 1,368 cases in 50 districts, the report shows.

Those who wish to view the full report is available can register to get a copy.