Insurers are spending less on defense – and paying more in losses
- SCCLR Newsletter
- Oct 6
- 3 min read
By: Kiernan Green
Carriers have cut legal budgets over the past decade, but loss ratios have surged to their highest in years – is there a looming reckoning to be had?
Liability insurers are spending less on defending claims, even as their losses mount – a divergence that could reshape strategies for MGAs, program administrators and wholesale brokers across the United States.
In 2014, liability carriers devoted just over 20% of losses to defense costs. By 2024, that share had fallen to 15.2%, a quarter lower than a decade earlier. Yet at the same time, liability loss ratios surged, climbing nearly 11 points to 60.6%.
It’s a paradox with big implications. A leaner defense spend hints at efficiency, but rising losses suggest that fewer legal dollars may not be slowing the tide of costly claims. Property and auto insurers, by contrast, saw their defense-to-loss ratios remain low and stable – under 5% – while their loss ratios improved in 2024.
The pressures on liability are structural. Complex litigation, sprawling discovery, and jury verdicts that climb higher each year keep the cost of losses climbing, even as insurers adjust their defense budgets. State rules – such as California’s requirement to fund independent counsel in certain cases – add further unpredictability.
For distributors and carriers alike, the lesson is clear: defense intensity is no longer a reliable signal of loss control. Instead, the decade’s data, distilled in Insurance Business’s Property & Casualty LOB Performance & Market Trends dashboard, shows where defense spend is thinning, where losses are mounting, and which business lines may demand a sharper pricing pencil.
The underlying report explores the decade-long shift in detail, benchmarking defense-to-loss ratios, direct defense spend and loss ratios across liability, auto and property lines. For those setting strategy in a market where litigation risk looms ever larger, the findings are hard to ignore.
How to use this data
Rebalance litigation budgets where the defense-to-loss ratio has fallen faster than peers, while loss ratios have risen (e.g., liability since 2019). In the Property & Casualty LOB Performance & Market Trends dashboard, filter to Liability and compare 2014 vs 2024 to size the shift.
Prioritize segments where defense intensity is low but loss trends are improving (e.g., 2024 Automobile and Property), subject to carrier appetite and capacity. Use the ranking view in the dashboard to identify top and bottom lines by defense-to-loss ratio for the latest year.
Calibrate rate and attachment strategy in liability programs given the 10.8-point decade rise in loss ratio. Benchmark your book’s defense-to-loss ratio against the dashboard medians and adjust panel counsel deployment accordingly.
Tighten external legal spend controls. As one practitioner put it: “If someone puts 10 lawyers on a file that needs two, that’s unreasonable.” Standardize discovery and shared systems to avoid duplication.
Stress-test 2023-2024 sensitivities. Use the dashboard’s year selector to quantify the 6-point liability loss ratio rise and the 7.6-point fall in auto, and scenario-plan for rate adequacy and claim handling cadence.
Covers major US P&C lines (Automobile, Liability, Property and Specialty) with annual data from 2014 to 2024.
Tracks defense-to-loss ratio, direct defense paid and loss ratio, with line-by-line time series and decade medians.
Provides rankings for each year and metric, plus side-by-side comparisons across lines.
Offers filters and drilldowns by line and year to benchmark performance and spot trend inflections; charts can be exported for internal use.
Designed for MGAs, program administrators and wholesale brokers to benchmark, plan and communicate with markets.
