The unsettled economy is having a major effect on insurer claim operations, including rising loss costs, increased levels of litigation and higher rates of fraudulent claims, according to a Towers Watson survey of 52 claim officers. As a result, expense management is becoming a major focus for insurers. The survey found that more personal lines carriers noted higher claim frequency than commercial insurers, including homeowners (52 percent) and auto (45 percent). By comparison, one in five general liability (20 percent) and commercial auto (18 percent) insurers saw increases in claim frequency. Turning to litigation, some 30 percent of respondents said general liability lines have been most affected by an increase in litigation, followed by personal auto (22 percent) and commercial packages (20 percent). On a regional basis, some 50 percent of respondents in the Southeast and 32 percent of respondents in the West reported an increase in litigation. As for fraudulent claims, more than half of the survey respondents showed an increase in exaggerated or potentially fraudulent personal lines claims, with auto (62 percent) and homeowners (56 percent) leading the way. Some 33 percent saw an upswing in fraudulent claim activity in workers compensation, while 20 percent of commercial insurers said they were affected by exaggerated claims in other lines. Towers Watson noted that the impact on loss costs is more dramatic in personal lines, where frequency, severity, litigation and fraud are all potentially on the upswing. Check out I.I.I. info on insurance fraud.