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Self insurance by large US companies has moved claims to law and increased its size?

“Over the past few decades, Fortune 500 corporations have increasingly opted to self-insure, with retentions of at least $3 to $5 million per occurrence and often $25 million or more. They look to insurance companies only for coverage of catastrophic events. The insurance industry is not seen as offering cost-effective first dollar or low-retention coverage. Since they are insuring themselves, Fortune 500 corporations have had to become their own claims managers, expanding their law departments to manage the risk.” (emphasis added) Met. Corp. Counsel, Vol. 16, May 2008 at 47, blares out this staggering claim by the President of eLawForum.

It is not common for the claims function to reside in the legal department (See my posts of April 23, 2006: claims-to-litigation metrics; and March 13, 2008: Council on Ethical Billing.). Nor has there been any recent noticeable growth recently in law department staffing. Is the emphasized statement true? Perhaps “claims” should be read as lawsuits. Even with that reading, it is not true that law departments previously abdicated litigation management to insurance companies.

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