Nuclear Verdicts creating Insurance Litagation worries

Insurance litigation is a tricky and expensive business and in 2023, litigation proved to be massive headaches for many companies. The number of payouts and the amount of said payouts has only increased drastically thanks to several factors some of which are beyond an insured carrier’s control.

Nuclear payouts refer to the damages that are sought in a lawsuit when a verdict is awarded to the plaintiff exceeding an amount. Most lawsuits are expected to be less than a certain amount, somewhere in the ballpark of $5 million. The term "nuclear verdict" refers to any court award or settlement that is higher than expected, but legal experts officially define a "nuclear verdict" as one that exceeds $10 million.”(1) These verdicts have only gotten bigger in the last ten years. In one four-year study done by National Law Journal between 2015-2019 show that the average of the top 100 verdicts in that time frame jumped from $64 million to over $250 million. 30 percent of the cases in 2019 topped over $100 million. (2)

 

Further information about nuclear verdicts breaks down the amounts and which type of litigation has led to these massive verdicts. In the case study examining 1,376 nuclear verdicts from 2010 to 2019:

  • 286 Jurries have returned a nuclear verdict.
  • 50% had verdicts between $10 and $20 Million, 33 percent were between 20 and 50 million and 16 percent exceeded 50 million, 101 of that number exceeded a so called Mega nuclear verdict of $100 million.
  • The median verdict is up 27.5% in that period, outpacing inflation and shows an upward trend of these verdicts.
  • Six states, California, Florida, New York, Texas, Pennsylvania and Illinois comprised of 63% of these verdicts, despite having a combined 41 percent of the population.
  • 23% of the verdicts studied came from medical liability while a similar number were the result of accidents, in particular trucking where one in four that resulted in a $10 million dollar verdict involved it. In total over 100 industries had a nuclear verdict during the four year period of study.
  • The majority of the verdicts come from pain and suffering with only 14% of the damage awards being related to medical costs, a figure that points to the jurors assessments over time:(3)

In that same study, there are a few things that point to why these are rising. The first is a changing demographic. In jury trial, you pull from the county the lawsuit is filed in, which means pulling from that jury pool. This jury pool has started to lean younger and more empathetic especially when bigger companies are involved.

The other more drastic effort is something dubbed reptile tactics. These tactics aimed to put fear into the juror’s heads. This fear leads to them lashing out at a perceived attacker with bigger payouts. The tactic includes touting big reward settlements in ads, bombarding them with social media posts and the like. These tactics only serve to spike the numbers up. Though the studies only go up to 2019, the verdicts have only climbed in the five years since.

The amount of money being rewarded in verdicts has only continued to grow. In 2024, there are already several $100 million dollar verdicts, thanks to a variety of lawyer tactics and empathy by the jurors. Insurance companies might not be able to handle the payouts that are expected of them.

About Axis

At Axis Insurance Services, LLC, we’re proud of our reputation in building highly customized insurance solutions for all types of professional service companies and their employees. We believe our diverse product options and outstanding customer service help us earn our clients’ trust and loyalty.

What sets us apart from other insurance brokers is our deep understanding of the market and our ability to tailor coverage options in sync with our clients’ objectives. Professional and Management Liability policies can be a commodity – we only build custom coverage solutions that work.

Celebrating its 25th year anniversary in 2024, Axis Insurance Services, LLC, is proud of our reputation in building highly customized insurance solutions for all types of professional service companies and their employees. We believe our diverse product options and outstanding customer service help us earn our clients’ trust and loyalty.

Formed in 1999, Axis Insurance Services, LLC is a nationwide leader in the professional and management liability insurance industry, developing innovative risk management solutions for today’s evolving businesses. We offer insurance programs to a broad array of professionals and industries, including insurance agents/brokers, attorneys, commercial real estate firms, technology, healthcare/medical, financial institutions, architects/engineers, consulting firms, media, and many others.

In 2014, we launched PLRisk in 2014 and today the two firms provide retail and wholesale coverage solutions for Cyber Liability & Privacy/Network Security, Errors and Omissions, Directors and Officers, Employment Practices Liability, Commercial Crime and Fiduciary coverage.

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