In insurance claims management, carriers spend millions each year on defense counsel with the hope that litigation strategy will reduce exposure, protect policy limits, and create better settlement outcomes. In many cases, strong defense work delivers exactly that.
But across the industry, a costly pattern shows up again and again: investing heavily in defense counsel only to ultimately pay the same indemnity that was predictable from the start.
A prospect recently summarized the problem with painful clarity: “I’ve seen files where they defended, defended, defended… and then we end up just paying limits. We spent fifty grand in defense fees just to pay limits. What a waste of time.”
This isn’t just frustrating. It’s economically inefficient, operationally draining, and most importantly- avoidable.
The hidden cost of defaulting to litigation
Defense counsel is essential, but not every claim benefits from prolonged litigation. Many claims follow trajectories that experienced adjusters recognize instantly: the facts, venue, and plaintiff posture point toward a high-likelihood indemnity range. Yet without objective decision support, teams often extend litigation simply because the risk of doing otherwise feels too great.
This leads to a common and expensive outcome: defense costs rise while indemnity stays the same.
Why defense strategies drift
Litigation drift happens when teams lack forward-looking intelligence about how a claim is likely to resolve. Without predictive insight, strategy becomes reactive:
- Evidence shifts
- Deadlines approach
- New counsel enters
- Venue pressures mount
Each development feels significant, but the underlying exposure often remains remarkably stable. A claim that was always headed toward limits will still end at limits, even after months of depositions, experts, and motion practice.
The operational impact on carriers
Continuing to defend cases that have predictable outcomes creates measurable harm:
- Rising loss adjustment expenses that do not improve results
- Delays in settlement that keep reserves open longer
- Capital tied up in claims that should have been resolved earlier
- Adjuster bandwidth absorbed by litigation tasks that don’t change exposure
Carriers aren’t just losing money. They’re losing customer loyalty, time, scalability and operational flexibility.
Where predictive analytics changes the defense equation
The solution is not to limit defense counsel. It’s to apply intelligence early enough to know which cases merit defense investment and which cases do not.
Predictive analytics gives claims teams visibility into likely outcomes before significant defense costs accumulate. By comparing a file against thousands of similar claims, predictive systems surface:
- The likelihood of paying limits
- The probability of early settlement
- Jurisdictional and behavioral risk factors
- Patterns that historically drive indemnity regardless of strategy
Instead of defaulting to litigation, teams can design data-backed defense strategies that match the actual risk.
Better alignment leads to better spend
With accurate forecasts, carriers can redirect defense spend toward cases where litigation meaningfully improves positioning and reduce spend on cases where it won’t. The result is:
- More predictable indemnity outcomes
- Reduced unnecessary defense costs
- Earlier resolution timelines
- More efficient use of counsel
- Stronger overall claims performance
The future of defense counsel is intelligent allocation
Defense counsel will always be a critical part of claims. But carriers no longer need to treat every claim like a potential battleground. By integrating predictive analytics into litigation strategy, they can distinguish between:
Cases that truly benefit from aggressive defense and cases where defend-and-delay tactics won’t change the indemnity.
When carriers can see those paths clearly, they avoid the costly trap of paying to defend their way to the same exact outcome.
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