More than half of cases brought by insurance policyholders succeed at the first instance

Analysis by law firm Herbert Smith Freehills, in conjunction with litigation analytics company Solomonic, found that insurance claims are among the most likely to succeed in UK courts, with 56% of cases brought by insurance policyholders succeeding at the first instance compared to an all-sector average of 48%.

However, the research – which analysed more than 1,000 cases heard in the Commercial and Chancery courts – further found that the recent Covid-19 pandemic is bringing new complexities to potential claims, heaping additional scrutiny onto how the sector responds to these challenges.

Herbert Smith Freehills’ analysis also confirmed that 25% of decisions made in insurance cases are taken to appeal. Only the healthcare (31%), commodities and mining (26%) and utilities (43%) sectors have higher figures here, likely reflecting the fact that insurance claims in these sectors are heavily based on contracts and contractual interpretation.

Furthermore, a significant proportion of insurance cases relate to levels of insurance coverage, with insurance sector professional indemnity cases also having high numbers.

Alexander Oddy, partner in the insurance disputes practice at Herbert Smith Freehills, said: “The insurance market has been hardening for the last two years and policy claims can be expected to be subjected to greater scrutiny by insurers with less inclination to give the benefit of the doubt to difficult claims.

“Covid-19 brings an additional layer of focus to claims as policyholders facing business challenges seek to press recoveries where they properly can.”

Representation influence

Further analysis was undertaken to reveal the extent to which the party’s legal representative can influence the outcome of a case.

The data revealed that, across all sectors, 47% of cases saw one party using a Queen’s Counsel (QC) while the other did not. Where there was a mismatch, the QC succeeded in 58% of cases heard.

Looking at insurance cases specifically, a mismatch of representatives occurred in 26% of cases – in these cases, the QC-led team emerged successful in 73% of the cases heard.

“Every case has its own unique features and these together with policy wording and evidence will influence what happens in practice,” Oddy added.

“However, the opportunity for corporate policyholders to understand litigant behaviour on the basis of trend analysis cannot be underestimated. With policy claims disputes likely to be on the increase, policyholders should seek to leverage every possibility tool to achieve a successful outcome.”

Gideon Cohen, co-founder at Solomonic, said: “Our data and analytics allow organisations to keep a close eye on critical insurance claim trends that may have a direct impact on their own prospects and business risk.”