Philadelphia Property Insurance Litigation in 2015

The American insurance industry is facing unprecedented opportunity and risk.  Issues are emerging as rapidly as each brand new technological advance, market shift, and change in the world economy.  Examples abound; Google is poised to enter the on-line auto market.  Cyber and data security dominate our daily headlines.  Insurance-linked securities have reached new issuance heights.  Imagine that we are just a few short years away from a time when you will seek to insure your driverless, autonomous car, with a pay-as-you-go auto insurance policy.  This is thought by some – including this writer – to be the “next normal.”

So many of these emerging opportunities and risks are property insurance-related.  Consider:  climate change, the use of predictive modeling, and drone-adjusted property claims.  There’s also CAT risk and the industry’s annual, random walk down hurricane alley.  Continued variations in state regulation continue to challenge.  And, that’s only scratching the surface.  However, this piece isn’t about the maze of risk and opportunity facing the industry nationally.  And, we’re not writing about property insurers specifically, at least not globally or nationally.  Instead, today we’re addressing just one place  – Philadelphia — and the regular flurry of litigation and conflict that seem to reside there when it comes to property claims & litigation.  Is Philadelphia really different?

It’s been our experience that lawyers and adjusters from most geographic areas regularly advise visitors (read: outsiders, interlopers) about the idiosyncrasies and risks associated with that venue.  It’s different here!  What a conservative/liberal jury pool.  What a unique cultural bent and bias.  This county has so many predilections.  Prejudices toward and away.  Folks here won’t like that.  Our juries are very generous with insurance money.  Our juries don’t like civil suits.  This writer’s been told, within minutes by a West Virginia judge, “Counsel, this jury will not like slick, Philadelphia attitude,” and just minutes later, by his clerk, “You’re working class and folks here are gonna like that.”  Everywhere and anywhere is unique and different, right?  Maybe.  Then again, maybe not.

In the microcosm that is Philadelphia-area first-party property claims, things really are different.  The City’s been called a judicial hellhole© by the American Tort Reform Association, and for a number of years was atop that organization’s list of jurisdictions considered the “most unfair and out-of-balance in the nation.”  According to the 2013 Caseload Statistics of the Unified Judicial System of Pennsylvania,, Philadelphia has 93 authorized trial court judgeships.  By comparison, Allegheny county has 43.  The counties surrounding Philadelphia have 69 combined (Bucks -13, Montgomery – 23, Chester – 13, Delaware – 20).  This demonstrates on some level the heightened-level of court activity in Philadelphia relative to other counties; meanwhile, our brief research indicates that, per the same report from the Unified Judicial System of Pennsylvania and information “last modified” only a few days ago, on January 15, 2015, 3900 civil actions were filed in Philadelphia alone last year for classified as “breach of contract – other.”  Generally, this is the classification most commonly assigned to insurance contract disputes involving property policies.  By comparison, there were – if I’m reading this correctly – 3390 premise liability cases filed in Philadelphia in the same time frame, while only 382 medical malpractice cases were filed.  In short, considering the very busy venue with a reputation for injury cases, there may be as many property insurance lawsuits as slip and fall cases filed.  Yes, it’s true that there is no actual count of actual property cases filed, but if the percentage is at all significant, the comparison the whole population of filed cases is close to remarkable.

Public-adjusters populate the area much more densely here compared to the rest of the Commonwealth.  Venue law permits the selection of Philadelphia when the underlying insurance claim has no ties whatsoever to the City.  The ghosts of juries past walk the floors of City Hall, after they awarded money when none was owed.  So, whether real or by reputation, Philadelphia is a draw for plaintiffs.  Those property policyholders choosing a venue for their coverage complaint, or a bad faith suit, choose Philadelphia.  But this is no tourism ad; the drain on the City’s resources and administration is real.  The sheer weight of Philadelphia litigation is borne out by statistics.  There have also been some recent shifts in the landscape facing insurers.  Not seismic shifts, and there’s no clear fault-line related to one regulation, or some recent appellate opinion.  Courts continue to consider insurers’ business practices and claims handling.  Policy language is challenged.  Certain topics are hotter than ever, i.e. depreciation, BI claims, unit pricing, and the appraisal process.  Opinions regarding what may be bad faith — and what is not – are issued almost daily, along with frequent decisions regarding the reach of the consumer protection law.  Meanwhile, decades-old issues retained some vitality as plaintiff theories, including agent/broker liability, concurrent causation exclusions, and defining actual cash value.  In fact, Pennsylvania’s continued and prominent position as a member of the minority of states that have not adopted the broad evidence rule may be tested this year.

Speaking of this year, many commentators and pundits have made insightful predictions for the industry in 2015.  We’re not so bold here, although we do have one prediction:  Philadelphia property litigation won’t be slowing down much, if at all.  There are no formal statistics available, at least that we know of, to measure such things, but we believe that as Sandy cases finally start to resolve, they’ll be replaced by a steady flow of 2014’s hail and water claims, along with the steady line of claims handling battles, coverage issues and appraisal disputes.  A few class actions may be filed (keep an eye on the depreciation issue), even though history tells us that since the overhead & profit cases in the mid-90’s, Philadelphia class actions against property insurers haven’t proved fruitful for the plaintiffs’ bar.

So, as predictions go, there’s not a lot expected to be new in Philadelphia, except more claims and more lawsuits.  As the industry evolves, eyeing risk and opportunity like no time in recent memory, things in the Philadelphia property insurance market will likely stay the same.

–By Robert T. Horst, Esquire

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