ANALYSIS: Insurance Suits Heated Up This Summer. Will It Last?

The summer months of 2020 saw a big bump in federal lawsuits about insurance disputes, but it’s too early to say whether that bump will continue.

During 2019, the number of suits filed in federal court under the insurance contract “nature of suit” was fairly stable each month. The first five months of 2020 show only a gentle uptick over last year’s filings.

In June, however, an analysis of Bloomberg Law dockets shows that insurance contract complaints were up by 20% over June 2019, and July 2020 saw 26% more insurance contract complaints filed than July 2019. August’s complaints are up about 14% over last year.

For the year to date, 881 more insurance complaints have been filed in 2020 than in the same period of 2019—about 11% more than last year’s total.

When the Covid-19 crisis hit, many expected a courtroom showdown between commercial policyholders and insurers that refused coverage for claims arising from the novel coronavirus. Some legislatures threatened to retroactively declare the coronavirus crisis covered under existing policies to protect local businesses from massive losses due to business interruption, contamination, and related problems. For their part, insurers warned that such a move would bankrupt them and leave all policyholders worse off. Legislation didn’t materialize, leaving the parties to petition the courts.

The summertime increase in cases could continue. In fact, it is still possible that the bulk of insurance lawsuits about Covid-19 coverage are yet to be filed, because it can take months to complete the mandated procedures involved in disputing a claim.

On the other hand, it could be that this summer saw the extent of any spike in cases, and suits will trend back down towards 2019’s levels. After all, policyholders are strapped for cash to fight lengthy court battles. Stay tuned.

Care to weigh in on what litigation you are seeing? Bloomberg Law is conducting a short survey on court impacts from the Covid-19 crisis—let us know how you see litigation shaping up this year.

If you’re reading this on the Bloomberg Terminal, please run BLAW OUT <GO> in order to access the hyperlinked content.