Litigation Management
The carrier's structured process for controlling legal defense costs, outcomes, and strategies on claims that have entered the court system.
industryPublished 2026/06/07Last verified 2026/06/07
FAQs
- What are litigation management billing guidelines?
- Billing guidelines are the carrier's rules governing how outside defense counsel must bill for services — including approved hourly rates, required task descriptions, pre-authorization for depositions or experts, and prohibitions on block billing or duplicative work.
- How does a carrier decide whether to settle or try a case?
- The decision involves comparing the estimated cost to try the case (defense costs plus expected verdict) against the cost to settle. Jurisdiction-specific verdict research, injury severity, coverage limits, and reputational factors all influence the analysis.
- What is the connection between litigation management and bad faith?
- Insurers who ignore settlement opportunities within policy limits expose themselves to bad faith claims if a verdict exceeds the policy limits. Documented active litigation management — including timely evaluation of settlement demands — is a key defense against extra-contractual liability.
Related Terms
Allocated Loss Adjustment Expense
Expenses directly attributable to a specific claim, such as attorney fees, independent adjuster fees, and expert witness costs.
Claims Leakage
Measurable overpayment on claims relative to the theoretically correct settlement, resulting from process failures, errors, or inadequate investigation.
SIU Referral
The process of routing a suspicious claim to the Special Investigations Unit for investigation of potential fraud before settlement.
Indemnity Expense Ratio
The ratio of claim indemnity payments to earned premium, measuring how much of each premium dollar is paid out as loss settlements.