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Most legal malpractice insurers report the number of claims filed in 2019 was either the same or higher than in 2018, a broker report says.
Only two of the 10 insurers surveyed by McLean, Virginia-based Ames & Gough reported fewer claims last year, according to the 10th annual report, LPLI 2020 Claims Survey: Law Firms Struggle with Rising Malpractice Claims.
Of the 10 insurers surveyed, six experienced an increase in the number of claims filed, with one seeing claims increase by at least 21%; two by 11-20%, one by 6-10%, and one by less than 5%.
The number of new malpractice claims brought against law firms in 2019 was higher than in past years and marked the first time since 2013 that most insurers surveyed reported higher claims frequency than what they had experienced the prior year, the report said.
“Anecdotally, 2019 was one of the worst claims years on record,” the report said. “Notably, most insurers in the survey reported a significant volume of claims with substantial reserves and large payouts. Furthermore, due to the increased cost to defend claims a number of matters settled quickly (to avoid the added expense) with the resulting claims above their primary layers of insurance.
“This leaves excess insurers in a more volatile position and signals a potential increase in premium rates for Lawyer’s Professional Liability insurance,” the report said.
Among other survey findings, insurers identified business transactions and corporate & securities as the practice areas experiencing the largest number of legal malpractice claims.
Insurers participating in the survey included: Axa XL, a unit of Axa SA; Brit, a unit of Fairfax Financial Holdings Ltd.; CNA Financial Corp; Huntersure LLC; Liberty Mutual Insurance Co.; Markel Corp.; QBE Insurance Group Ltd.; Sompo International Holdings Ltd.; Swiss Re Ltd.; and Travelers Cos. Inc.
The data was collected by email between February and April 2020.
Last year, legal malpractice insurers reported seeing a host of “ominous” developments involving claims, most significantly an increase in claim severity.