More companies had insurance coverage for class action lawsuits in 2022

This past year, 45.8% of companies facing a class action lawsuit had a portion of their defense costs covered by insurance, up from 32.1% in 2021 and 41.9% in 2020, according to Carlton Fields’ 12th annual Class Action Survey.

While insurance covered a portion of more class action defense costs this past year, the total amount covered by insurance fell around 12%, from 42.2% in 2021 to 30.4% in 2022, according to the Carlton Fields. Companies reported having excess liability coverage or large coinsurance, and are paying more out of pocket as a result. 

The survey also found that while corporate spending on class action lawsuits has increased steadily during the past five years, the percentage of settlements in 2022 reached a five-year low. Carlton Fields reported 47% of class actions settled in 2022, compared with 73.1% in 2021 and 58% in 2020. 

Looking at class action suits by type, insurance accounted for 12.1% of these cases in 2022, down slightly from 2021. These figures exclude COVID-19-related claims, Carlton Fields noted, adding most insurance cases involved financial products and offerings or were related to disasters. 

Labor & employment suits spike

Carlton Fields reported its previous survey predicted that labor and employment would be the biggest contributor to class actions during 2022 and that prediction bore fruit. Employment and labor class actions accounted for 33.6% of all class action suits in 2022. For comparison, consumer fraud resulted in the second most class action suits, comprising 21.7% of cases. 

Companies reported that regulatory agencies and employees, via their counsel, are being more aggressive than in past years, and this was a driving force behind labor & employment suits. Carlton Fields noted that regulatory investigations or enforcement actions now often result in class action suits. 

Concerning the year ahead, the survey found that data privacy and consumer fraud are the top concerns. Worry over a spike in these types of filings is being propelled by additional states adopting privacy rules behind California, while consumer fraud cases are projected to be driven by social media postings and product labeling, Carlton Fields reported. 

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