Search engine optimization
Joe Petrelli, President of Demotech. Courtesy, Demotech
Joe Petrelli, co-founder of Demotech, the financial analysis firm that rates many of Florida’s domestic property insurance companies is out with a new warning for the marketplace. He says national law firms are each spending millions of dollars annually with companies such as Google to steer website search results by insurance consumers to websites controlled by the law firms. Petrelli says the resulting surge in new litigation against insurance companies led directly to some of the seven insurance company insolvencies in the past 18 months in Florida.
“Now the litigator can get funding via a litigation marketing firm and say, ‘Go find me as many policyholders as you can of XYZ Insurance Co. because they have a bad policy provision,” he told the Insurance Journal. “The opportunists know that it’s going to take at least a year for a filed correction with the department of insurance to address the issue until that gets rolled on to the other policyholders.”
Petrelli teamed with data analytics expert Ted Kozikowski to form the firm 4Warn, which has been researching the litigation phenomenon and advising insurance carriers on how to mitigate against what he calls “technology enabled claims instigation.” Kozikowski said in the article that five large law firms are spending about $45 million a year on Google search returns. For Petrelli, who is an actuary, the future doesn’t look good. “Without control of claim frequency, insurance companies will quickly lose control of rate adequacy,” he said. “There’s no doubt. It’s just the actuarial formula.”
Their warning is just the latest. Lex Machina reports the number of lawsuits in federal court involving insurance companies is up 30% so far in 2022 over last year, part of a growing five year trend. Business liability, hurricane claims, and home insurance cases were the majority of cases.
In other litigation news, the Institute for Legal Reform reports that lawsuits involving the federal American with Disabilities Act (ADA) have skyrocketed since 2013. Its latest research report, Preserving Protections, Curbing ADA Litigation Abuse, shows that a small group of 18 opportunistic plaintiffs’ firms filed almost 45,000 ADA lawsuits nationwide between 2009 and 2021 – 44% of all ADA cases during that time. “The ADA is an important law, but opportunistic plaintiffs’ lawyers and serial ‘tester’ plaintiffs, those who file complaints against businesses but do not intend to actually visit the properties, exploit it to pressure small businesses into paying huge settlements,” according to the report.
LMA Newsletter of 7-10-23
