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Nuclear verdicts show no sign of slowing down in 2023

  • Market Insight 05 December 2022 05 December 2022
  • Global

  • Insurance 2023 - the year ahead

Drivers will include rising corporate mistrust, growth in third party litigation funding and fake advertising.

The rise in social inflation is not a new phenomenon, but it’s increasingly become a factor in a significant number of jury cases. Nuclear verdicts – exceptionally high jury verdicts (>$10m) that exceed what most would consider reasonable – show no sign of slowing down in 2023, and large public companies are especially vulnerable.

Nuclear verdicts will be driven by many factors in the coming year, including growing corporate mistrust, growth in third party litigation funding, social pessimism, savvy plaintiff’s lawyers, reptile theory, lottery mentality, actual liability, bad faith and policy limits demand pressures, and fake advertising in the form of plaintiff’s lawyers misrepresenting verdicts/settlements.

With so much on the line, carriers will start to get more proactive about working with insureds to identify proper outside counsel. It has become increasingly important for carriers and insureds to hire the right lawyer to start with; the cheapest person on the panel may not be the right person for the case and companies are beginning to realize that they must incur appropriate expense at the forefront to retain qualified counsel that can prevent a nuclear verdict.

Combatting social inflation takes several factors, including: 1) a strong claims team, proper defense counsel, cooperative insureds and collaborative dialogue amongst them; 2) early development of a detailed case strategy; 3) a realistic and practical defense budget; 4) an aggressive defense; 5) proper jurisdiction/venue analysis; 6) aggressive discovery tactics; 7) strong pre-trial motions; 8) creative settlement strategies/offers of judgment; 9)  intense trial and witness prep (mock trials, focus groups, jury and venue research, jury consultants, witness coaches, etc.); and 10) strong trial experience.  

From the outset, insurers must be realistic in terms of budgets for outside counsel, and must be candid and transparent about what is truly needed for a successful outcome. When it comes to counsel, carriers and insureds alike will increasingly need to ensure that proper defense counsel are appointed and balance defense costs against the chance and frequency of nuclear verdicts.

View all our Insurance 2023 Predictions here

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