New data from Mactavish finds that the number of commercial claims disputes going to the UK High Court rose 14% last year, with the company’s CEO arguing that insurers are increasingly prioritising their own interests over clients in the tough insurance market.
Mactavish’s Litigation Claims Index, which is now in its second year, shows that there were 82 commercial insurance lawsuits filed against insurers in the High Court in 2022. When personal injury claims are included the number again rises 14%, this time to 158.
The outsourced insurance buyer and claims resolution firm said the increase in disputes tracked by the index suggests insurers are continuing to take a “tough attitude” to claims payouts in the hard market.
Mactavish said that prior to 2019 when the market began to harden, commercial insurance claims being litigated each year was relatively stable, hovering at around 30 each year.
But it believes that since 2019, its numbers, which eventually turned into the index, suggest a “dramatic increase in litigation”. This is a “deeply worrying trend”, said CEO Bruce Hepburn.
“What the market needs to see is a dramatic fall in our index, to the numbers we were recording pre-2019,” Hepburn said. “While the index remains elevated, or worse continuing to rise, there is only one conclusion to draw. Insurers are prioritising their own interests over those of their clients, rebuilding their balance sheets to the detriment of customers, who are being forced to seek declarations from court in order to get paid out on claims,” he added.
The Litigation Claims Index, which tracks claims reaching the UK’s High Court, recorded a rise in product liability and professional negligence claims disputes last year.
However, the two biggest areas to see a jump in litigation were companies pursuing Covid-19 business interruption (BI) claims and aircraft companies suing their insurers for non-payment of claims relating to the loss of aircraft in Russia following the invasion of Ukraine.
The data, which tracks claims involving the 20 largest insurance companies in the UK, recorded four Russian aviation claims in 2022 and seven Covid-19 BI claims. The Covid-19 BI claims included litigation by restaurant chain Pizza Express and a group of Premier League football clubs including Arsenal, Liverpool and Tottenham Hotspur.
Mactavish believes claims litigation is only set to rise again this year. For example, 20 Russian aviation claims were filed on 23 February, on the one-year anniversary of Russia’s invasion of Ukraine. The wave of claims filed on a single day was no coincidence as many insurance contracts required the aircraft to have been lost for a year before any claim could be made, explained Mactavish. Many of these claims are set to be disputed by insurers.
“The scale of the issue facing insurers and their customers should not be underestimated. The number of lawsuits filed against insurers should not be subject to never-ending inflation as there is little or no evidence that the underlying number of insurance claims is going up,” said Hepburn.
“Many of these disputes should simply not be going to court. When you buy an insurance product you expect to be protected from loss, not exposed to further costs and delay as you seek to be reimbursed. The process of making an insurance claim should be consensual not adversarial,” he added.
Mactavish made clear that the legal cases being pursued in court represent “just a fraction” of the underlying number of insurance claims being contested by companies each year. It said the frequency in which claims end up in court offers a window into how insurers’ attitudes to claims are changing.