Class-action lawsuits are a practical vehicle for litigation of losses resulting from natural disasters—due to the large number of plaintiffs residing in a limited geographic area where the value of an individual claim alone may not be worth pursuing. And with 2011 widely anticipated to be the costliest year for natural disasters ever reported, insurers could be facing the prospect of a flood of such suits.

But insurers can take steps in advance of a catastrophe to minimize the likelihood of class-action exposure, including: diligent claims handing, ensuring compliance with relevant statutes, and continually reviewing and revising policy language to reflect lessons learned through litigation.

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