Insurers face average of 40 lawsuits

The average American insurance company currently faces 40 lawsuits, five of which they initiated, according to a survey of corporate counsel in America conducted by the international lawfirm Fulbright & Jaworski L.L.P.
The annual “2005 Litigation Trends Survey” found that nearly one quarter of insurance companies have legal budgets of over 2% of their total gross revenue and that litigation costs represent more than 50% of their legal budget the most of any industry.
In addition, Insurance litigation and contracts issues were the two main areas of lawsuits for insurance companies, followed by labor/employment and professional services actions. Therefore the survey indicates that along with class action lawsuits, these remain the top concerns for insurance counsel.
Furthermore, although insurance companies were on the lower end of the scale in comparison to other industries regarding the number of lawsuits filed during 2005, the industry was the second highest in terms of arbitrations initiated.
The median-sized company of the 354 surveyed reported annual gross revenues of $484 million and the majority of companies were represented by general counsel or a chief legal officer.
Most respondents expressed more concern about what they perceived as the high costs of litigation than they did about winning or losing the underlying lawsuits.
For companies with gross revenues under $100 million, there was a different new worry regulation and compliance, more specifically, the Sarbanes-Oxley Act and its tougher requirements for securities filings.
“The survey demonstrates what we have long suspected that litigation has become an integral part of the structure of corporate life,” Stephen C. Dillard, head of Fulbright’s worldwide litigation practice, says. “We believe the stark light the data sheds on the impact of litigation . how businesses meet that challenge and process it as part of their ongoing operations, is of critical importance to law firms and the business community.”