United States: Trends In Weather-Related Insurance Filings In Federal Courts

The United States federal court system periodically publishes reports (called "Just the Facts") addressing trends facing the federal judiciary. On November 16, 2021, the U.S. Courts released its latest "Just the Facts," https://www.uscourts.gov/news/2021/11/16/just-facts-insurance-case-filings-spike-after-natural-disasters. This latest report focuses on insurance filings (defined as cases alleging breach of an insurance contract) from FY 2000 through FY 2020 and the relationship between such case filings and natural catastrophes. As a caveat, while this latest report does not clarify, it appears that "filings" refers to original filings and  removed actions.

So, what does the data show? Unsurprisingly, filings spike after weather catastrophes, typically a year or two post-event. For example, after Hurricane Katrina struck the Louisiana and Mississippi Gulf coasts in 2005, insurance filings spiked in FY 2007 and 2008 to their highest levels over the past 20 years, with the Eastern District of Louisiana reporting more insurance filings in FY 06, FY 07 and FY 08 than any other US district court.

Similarly, following Superstorm Sandy in 2012, insurance filings surged in the District of New Jersey and the Eastern District of New York. A large percentage of these Sandy filings involved claims brought under flood insurance policies issued under the National Flood Insurance Program. In 2017, following Hurricane Harvey, which came ashore in Texas, and Hurricane Irma, which hit south Florida, FY 2019 saw the Southern District of Texas and the Southern District of Florida lead all other district courts in insurance filings, many of which also involved flood policies.

One surprising fact from this latest "Just the Facts" is that following Hurricane Maria, which devastated Puerto Rico in 2017, there has been no spike in insurance filings in the District of Puerto Rico. The reason for this lack of a spike in filings is not clear, but it could be due, in part, to Puerto Rico's 15-year statute of limitations for breach of contract claims (one that has since been changed to 4 years for contracts executed after 2020). So, we may yet see a spike in insurance filings in Puerto Rico down the road.

The lag time between a catastrophic weather event and a surge in insurance case filings is dependent on several factors. The statute of limitations in each state is one driver of the deadline to file an insurance-related lawsuit. Also, legislation sometimes arises after catastrophic weather events that leads to a spike in litigation. But, overall, it appears surges in insurance filings are a common result following catastrophic weather events.

Of course, more recently, federal courts have been inundated with insurance filings addressing coverage for COVID-19 related issues. While such filings would not fall under the "weather catastrophe" category and were apparently not included in this recent "Just the Facts", the expectation is that federal court data for FY 20 and FY 21 will show a similar spike in insurance filings.