Is the Recession Affecting the Personal Injury Claims Process? l Seattle Accident Attorney

Everyone now knows that 2008 was a terrible year for many of us financially.  The market tanked and the mortgage crisis shook many.  Most economists now agree that the United States has been in a recession for several months.  I’ve heard reports that the recession actually began in the end of 2007.

How does the current economy affect the litigation and personal injury claims process?  I have seen some changes just in my own practice.  Insurance companies, like most other corporations, are tightening their belts and looking for ways to cut costs and retain more revenue.  For insurance companies, one way they do this is by trying to cut down on claim payouts.  This refers to the amount of money a carrier has to pay out to settle and resolve claims.  Some companies have thousands, or hundreds of thousands, of claims.  So reducing the average claim payout can actually save the insurance company millions of dollars.

In my own practice, I see that most carriers are reducing the amount of payouts for injury claims.  This has ranged anywhere from 10% to 50% in some cases.  In a few cases I have seen an outright denial of a legitimate claim based on some small or weak defense that never would have happened a year ago.  For example, a person who had an injury 10 years ago but made a full recovery.  This fact now becomes a major issue for the insurance company because it can argue that some or most of the medical care or symptoms were due to a pre-existing condition.  Sounds ludicrous I know.  But the carriers are making these type of ludicrous assertions just to save money.

The indirect result is to force claimants and their attorneys to file more lawsuits.  A lawsuit is expensive and can take up to 2 years just to get a trial date.  That means the insurance company is holding onto its money a lot longer and is able to use it for investment or to pay down other debts.

I’ve filed 7 lawsuits just in the last 45 days.  I only average about 1-3 new lawsuits every 60 days or so.  But because the carriers are now reducing payouts by as much as 50%, my clients are forced to litigate just to recover a fair amount of compensation to pay medical expenses and make up for lost wages and other incidental damages.  In one significant injury case, the carrier took 4 months to respond to a settlement demand.  Then proceeded to deny the claim entirely, even though its own insured was the sole cause of the accident according to the police report!

One insurance claims adjustor friend of mine told me that his superiors told his department that the goal was to reduce claim payouts by 30% over the next twelve months.  And that adjustors would be paid a bonus for each month they met this goal.

Now more than ever do accident victims need to retain experienced and competent counsel to help them with significant and legitimate injury claims.  My office has also seen a spike in new client inquiries and sign-ups, presumably because unrepresented claimants are finding it impossible to settle a claim on their own now that the insurance industry is tightening its belt.