Crawford’s Van Bakel: Signs insurance industry’s litigation woes aren’t going away

Pat Van Bakel, president of loss adjusting at Crawford, sat down with The Insurer TV to discuss the monster lurking under the insurance industry's bed: litigation finance.

For Van Bakel, the industry's problem with litigation finance begins with its ubiquity. Over the past few years, it has become a part of everyday American life, with Van Bakel pointing out that signs of it line the highways for all to see.

“You don't have to drive very far in the United States anymore without seeing a plaintiff attorney billboard.

“The latest stat I saw is that, in all of the metro urban areas in the United States, one out of four billboards are now plaintiff attorneys,” said Van Bakel.

This encroachment on the day-to-day life of the average American has seen litigation finance industry become a behemoth of an industry, which Van Bakel sees as primed for further growth.

“Litigation financing is an industry that, not that long ago, didn't exist. The predictions now are that, within the next two or three years, it'll be a $30bn industry, really from nothing,” said Van Bakel.

It is not just the rapid growth and omnipresence of litigation finance that concern Van Bakel – he also sees the industry as outmanoeuvring the insurance sector when it comes to talent, declaring that the latter is “bringing a knife to a gunfight”.

Van Bakel argues that it is time for the industry to stop fixating on the costs of fighting claims and instead to invest in talent.

“During last decade, what the industry is spending to investigate and defend casualty claims has not kept up with the pace of inflation.

“It feels a little bit like, as an industry, we're taking a knife to a gunfight. The talent in the defence attorney world is getting poached and pulled over to the plaintiff side. There's a lot more money available there.

“Our industry has been focused on making sure that we've got lawyers that are billing at the right hourly rate, as opposed to, do we have the right talent to combat the pressures that are coming in the market?” said Van Bakel.

Litigation finance billboards didn’t just sprout from the ground. Van Bakel concluded by noting that the seeds of this industry have been planted by the US public's growing disdain for corporate America.

“Public perception is a big driving force too in social inflation.

“The profit-taking and things that we've seen and heard have caused the average citizen to have a disdain for big corporate America.

“There’s all kinds of subtle messages against the greater good of the insurance industry and planting those ideas with the American need to take up litigation,” said Van Bakel.

To combat this turn of public sentiment, Van Bakel explained how Crawford is using AI to analyse the best strategy to take on a claims case based on past behaviour of the individuals involved.

“We're using sentiment analysis and AI and predictive analytics to try and identify whether it's a particular jurisdiction or particular judge, a particular even individual person.

“We're measuring their sentiment to get a sense of whether we think they're going to be prone to litigate or not,” said Van Bakel.

Watch the full 6-minute interview to hear more about:

  • How early intervention can get claims on the right path
  • How Crawford is using AI to analyse claims data
  • Crawford’s use of sentiment analysis to see how a judge will act