Ask any industry professional, from the boardroom to the claim handler, What is one of the top problems facing the industry? More often than not they will answer, litigation. Whether it is auto, personal injury protection, medical malpractice, or the ongoing battle over homeowners', sinkhole, and water liability, litigation is a main feature of any line of insurance, cost withstanding. Most of the time, however, the perception of litigation and its effect on a line of insurance is undocumented and subjective. As a result, litigation can serve as the bogeyman wherever needed.

Now, where is this better seen than in the legislative process? Citizen legislators, overwhelmed by trying to understand an insurance crisis, often rise and point a finger at fraud with a certainty not shown since the Salem witch trials. And each time they do, they find comfort in that particular section of the unwritten unofficial legislative handbook. When approaching insurance reform, litigation equals fraud, which equals higher rates, which leads to outrage, and ultimately to votes. Sometimes this fixation on fraud is helpful, for it provides it quick narrative that is easily understood.

The industry tries to paint itself as the guy in the white hat and lawyers in the black hats (a tactic also tried by lawyers themselves). While the ensuing gun battle erupts, it frees up policymakers to quietly work on other more substantive issues. Once the bill is enacted, however, are the steps taken to reduce litigation are touted as a major victory? But without the matrix to measure the level of litigation, it is just a matter of time before litigation is the main topic around the water cooler. There are exceptions: those momentary glimpses into the promises made and the results that followed. One such example of this process is found in the 2003 workers' comp reforms and the changes it made to claimant attorneys' fees.