Is the Insurance Industry at an Inflection Point?

The defense side of the insurance industry is facing serious pressure. According to Taylor Smith, president of Suite 200 Solutions, the convergence of talent shortages, shifting client relationships, growing billing friction, and the plaintiff bar’s rapid adoption of AI and technology has created a moment of reckoning for claim organizations and their law firm partners.

In CLM’s recent CCO Discussions webinar, Smith unpacked findings from the 2024 CLM Defense Counsel Study—a wide-ranging survey of 375 attorneys across the insurance defense bar. The data points to a system under strain, with ripple effects across staffing, negotiation, and litigation outcomes.

Five Areas of Confluence

Smith identified five themes where survey results show alignment and tension between claims organizations and defense counsel:

• Future Challenges: The top pressures cited: low rates, hiring and retention, aggressive audits, and—tellingly—AI and technology adoption.

• Talent Shortage: 65% of firms report not being fully staffed, and 90% say recruiting has become “much more difficult.” Some firms are even turning down assignments due to lack of capacity.

• Client Relationships: Defense counsel rating their client relationships as “stronger” dropped from 61% in 2020 to 52% in 2024. The share who believe they understand client needs fell from 68% to 52%.

• Core Pain Points: Invoice adjustments remain a flashpoint—defense counsel believe they’re giving up 9.5% post-appeal, while claim executives estimate only 5%. 78% say adjustments feel subjective and inconsistent.

• Career Satisfaction: Only 63/100 reported career satisfaction, with just 53% recommending insurance defense to new law graduates.

The Plaintiff Bar’s Weaponry

Perhaps the biggest shift? The plaintiff bar is investing heavily in technology.

• EvenUp Law has raised $220M, hit unicorn status, and now serves thousands of plaintiff firms, claiming to boost settlements by 30% and policy limit settlements by 70%.
• Their AI-generated demand packages come with no branding, leaving defense unaware of the technology behind the documents they receive.
• Litigation funders like Quanlex and Legalist are following suit with AI-enhanced models, further strengthening plaintiffs’ hand.

Smith warned: “The game is about litigation weaponry, and that weaponry will ultimately reveal itself to be data.”

Verdict Sizes Post-COVID

Smith also shared fresh data from SigmaSight AI’s verdict analysis of 11,000 cases:

• Verdicts excluding punitives: Up 28% during COVID, and 179% from pre- to post-COVID.
• Including punitives: Up 12% during COVID, and 274% overall since pre-COVID.
• Non-economic damages: Up 40% since 2015–2019, with Texas responsible for nearly half that rise (165%).

His most important takeaway: granularity matters. Venue and attorney differences mean defense teams can’t rely on broad generalizations (“New York is worse” or “Texas is a problem”). Instead, strategy must be tailored to county-level realities and specific plaintiff attorney track records.

Inflection Point or Not?

So, is the industry at an inflection point?

Smith doesn’t offer a simple yes or no. Instead, he urges leaders to:

• Participate in industry-wide initiatives like CLM’s Litigation Management Task Force.
• Acknowledge friction points between claims and counsel, but keep focus on the bigger threat—the plaintiff bar’s AI-fueled sophistication.
• Leverage tools and data to understand which venues to try cases in, and which to avoid.

As Smith put it, “We’re not trying enough cases in my view. But more importantly, it’s about knowing which venues we should try, rather than those we should avoid like the plague.”

Read the full discussion and access the research from CLM’s CCO Discussions webinar here: Is the Insurance Industry at an Inflection Point?