KEY FINDINGS
• 62% of carriers globally say that legacy claims challenge profitability and operational efficiency.
• General liability claims managed by Gallagher Bassett saw a 34% lower duration to close in North America.
• 69% of carriers in North America have increased premiums due to the impact of social inflation.
Legacy claims and their impact
Legacy claims necessitate substantial financial reserves, tying up capital and talent that could otherwise be invested in growth opportunities or utilized for strategic initiatives. Nearly half of the carriers in North America say that legacy claims pose challenges to their business
profitability, financial health, and operational efficiency — this trend correlates with global survey findings, highlighting a widespread industry challenge. Legal fees, administrative expenses, and other related costs associated with resolving legacy books of interest can erode profit margins and impede the organization’s ability to adapt to changing market conditions.
From 2019 to 2023, there has been a 16%–30% increase in the average cost of settled litigated claims in North America. Significant increases of 30% were seen in auto bodily injury, with general liability bodily injury costs seeing rises of 23% and workers’ compensation at 16%. And, the average cost to defend settled, litigated claims has also increased in the same timeframe, with a range of 12%–17% depending on coverage type, albeit at a slower rate than the cost of settled claims.
Organizations can minimize their long-term financial impact by implementing strategies that accelerate legacy claims resolution. While 59% of North American respondents employ in-house teams to accelerate the resolution of legacy claims, 37% of carriers consider engaging claims and risk management providers as their primary strategy.
Legacy books managed by Gallagher Bassett’s dedicated Legacy Practice Group saw lower durations to closure, with average days to conclusion ranging from 20%–34% less than the benchmark figures depending on coverage type.
Originally published as a section in Gallagher Bassett’s whitepaper, The Carrier Perspective, 2024 Claims Insights. Download here.
