Law departments within insurance companies demonstrate a high level of sophistication in corporate legal maturity. Consider the following:
- Legal costs are lower. Median partner billing rates are the lowest among the practice areas tracked by the CounselLink® team.
- Rates tend to be stable. Legal rates in insurance work also have the least volatility with a score of 2 out of a possible 10.
- Highest AFA utilization. Legal departments in insurance have the highest AFA utilization rates – 15.6% of matters structured under alternative fees.
These data points stem from the most recent Enterprise Legal Management Trends Report (Mid-Year Update 2015), which is based on invoices processed. However, to gain a better understanding of operations within insurance – and specifically legal departments within Property & Casualty (P&C) carriers – we surveyed 94 organizations to identify:
- What legal department metrics are being used?
- Which metrics are most effective?
- What cost control initiatives are being implemented in the New Year?
Top 5 Legal Department Metrics
The top legal department metrics – those metrics law departments identified as most effective for insurance carriers are:
- Average total cost of case (loss + legal costs): 84% use it and 72% rate it effective.
- Legal expense per case: 82% use it and 65% rate it effective.
- Cycle time (days to resolution): 82% use it and 62% rate effective.
- Loss per litigated case: 77% use it and 60% rate it effective.
- Allocated loss adjustment expense (ALAE) as % loss ratio: 71% use it and 60% rate it effective.
These results have been rendered in a visual format in the infographic nearby and are this week’s Friday Share. In addition, we’ve published a summary of the findings here and the complete report can be downloaded freely with registration: U.S. P&C Law Departments Rate the Metrics They Use to Manage Costs and Performance.
Infographic: Law Departments Rate Metrics to Managed Costs
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