The number and scale of large legal verdicts against companies in the US have significantly increased in recent years, according to industry data.
These so-called “nuclear” verdicts, which exceed $10 million, have nearly tripled since 2020, while the median verdict value has more than doubled.
In 2023, nuclear verdicts rose by over 27%, and “thermonuclear” verdicts, valued at more than $100 million, increased by 35%, according to Marathon Strategies.
Read more: The cautionary tale of nuclear verdicts
Such trends are impacting industries from automotive to entertainment to chemicals and pose challenges not only to US businesses but also to international firms operating in the country, according to Allianz Commercial's latest liability report.
Alfredo Alonso, Global Head of Liability Insurance at Allianz Commercial, stated that shifts in technology and societal norms are presenting new challenges for the insurance market, affecting perspectives on risk assessment and capacity deployment.
“These increasing loss trends are influencing insurers’ perspectives on issues such as capacity deployment, especially in the US, and the profitability of both older and future underwriting years. Collaboration among stakeholders is crucial to managing these changes and controlling liability claims costs,” said Alonso.
The surge in nuclear verdicts stems from several factors, including evolving jury demographics, changing legal tactics by plaintiffs' attorneys, and the erosion of tort reform measures. Additionally, punitive, compensatory, and non-economic damages, such as pain and suffering, contribute to these large awards.
Allianz Commercial’s report notes that growing public mistrust of corporations and the normalization of large verdicts, including billion-dollar personal injury awards, have also played significant roles.
Joerg Ahrens, Global Head of Key Case Management at Allianz Commercial, said that the upward trend in social inflation, driven by these verdicts, places financial pressure on businesses, consumers, and insurers.
“Attempts at tort reform, such as caps on non-economic damages, have met with varying levels of success. In the absence of more effective reform, greater cooperation between insureds and insurers, and adopting a tougher stance to settlements are needed to mitigate the spiraling cost of liability claims,” said Ahrens.
Litigation targeting the pharmaceutical, food, and chemical industries has also grown, often involving claims of carcinogenicity linked to products such as opioids, talcum powder, and herbicides.
The complexity and cost of these claims are heightened by the long latency of illnesses such as cancer and the accumulation of losses across multiple producers.
Synthetic chemicals known as PFAS, or “forever chemicals,” have further intensified litigation. Environmental contamination, water treatment issues, and personal injury claims have resulted in double-digit billion-dollar settlements in the US, with cases also emerging in Europe.
The report observes a rise in collective actions outside the US, particularly in Europe, where new legislative frameworks and consumer group actions have led to increased litigation. Product liability, consumer protection, and personal injury remain key drivers.
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