View this article online: https://www.claimsjournal.com/news/national/2025/10/30/333711.htm

The Impact of Nuclear Verdicts on Casualty Claims

“Nuclear verdicts” isn’t just a buzzphrase. These jury awards exceeding $10 million are becoming more frequent and severe. And for claims professionals, this isn’t just a legal or media trend—it’s a fundamental shift in risk exposure. These outcomes are reshaping claims strategy, influencing reserving practices, and driving a more proactive approach to litigation management and settlement decisions.

The Numbers Tell The Story

Since 2010, nuclear verdicts have surged. Between 2010 and 2019, the median award jumped from $19.3 million to $24.6 million—a 27.5% climb that eclipsed inflation (17.2%) in that same span, according to data from the U.S. Chamber of Commerce Institute for Legal Reform.

Recent research shows both the frequency and severity of nuclear verdicts are rising. The U.S. Chamber’s data notes that median awards in product liability cases reached roughly $36 million in 2022, up sharply from a decade earlier. And in 2023, Marsh reports nuclear verdict payouts totaled $14.5 billion—a 15-year high—with a notable jump in the number of verdicts exceeding $100 million.

On the broader front, “social inflation,” rising liability costs driven by societal and legal trends, has lit a fire under average claims. According to the Swiss Re Institute, liability claims in the U.S. have climbed by 57% over the past decade, and in 2023 they reached a 20-year high with a 7% annual increase, far outpacing economic inflation. These aren’t medical costs or wage increases. What’s driving these figures is shifting culture, jury sentiment, evolving legal standards and the growing role of litigation funding.

Why It Matters—And Why It’s So Real

The increasing frequency of large jury awards and the overall rise in claim severity are well-documented trends, but what are the practical implications of these developments?

• Reserves run thin: Casualty insurers are finding loss severity well beyond the pace of economic inflation, with double-digit growth particularly evident in product liability, umbrella, and excess liability lines.

• Pricing pressure is on: Insurers and reinsurers, lean on reserves, are bumping premiums. Some are pushing for rate hikes of 15% to 20% just to keep pace, according to A.M. Best.

• Availability dips: With claim costs so unpredictable, insurers are pulling back from certain lines or jurisdictions. That tightens coverage availability and drives prices up even more for businesses and consumers.

Worst of all? None of this trend seems to be slowing, pushing liability costs beyond what economic factors alone could explain.

Fueling The Fire

So, what’s behind it all? Three big forces:

• Shifting jury moods: Society is changing. Jurors are more skeptical of big companies, more empathetic toward victims—and they see big awards as statements, not just compensation, as is highlighted in a recent Wall Street Journal article.

• Litigation funding and marketing: Third-party litigation funding—hedge funds and others bankrolling lawsuits—lets plaintiffs and lawyers stay in the game longer. Plus, aggressive ads and anchoring tactics sway juries toward sky-high awards.

• Tort law evolution: Broader legal theories and looser evidentiary standards expand the scope of what can be alleged—and what juries can award.

What Insurers and Risk Officers Can Do

So how do you play defense against this?

• Sharper underwriting and claims handling: Early case triage, analytics to flag high-risk claims, faster resolutions; these aren’t optional anymore.

• Reinsurance strategies: Buyers are layering protective coverage, keeping in mind nuclear verdicts could dwarf typical limits.

• Focus on prevention: Improving product safety, compliance and transparency decreases not just claims frequency but also how bad the fallout can get when one happens.

• Public and legislative approach: Advocating for reforms—jury instructions, funding transparency, restraining anchoring—is a slow road but a meaningful one.

A Real-World Ripple Effect

Here’s something often overlooked: As insurers adjust pricing or pull capacity, everyone pays—not just the companies being sued. Higher liability premiums roll into product costs, rent and services. It ripples through the economy.

Wrapping Up

Nuclear verdicts and social inflation have evolved from niche legal concepts to headline drivers of the casualty insurance landscape. They’re twisting actuarial models, reshaping pricing, nudging legislation, and broadening societal debates. The bottom line? It’s not just about bigger checks; it’s a shift in risk culture itself.

Being observant, proactive and nuanced is no longer a “nice to have” for insurers and risk professionals—it’s exactly what separates organizations that adapt and thrive from those that don’t.

Dhakal is the director of claims solutions at CLARA Analytics, a provider of artificial intelligence technology for insurance claims. Pragatee started her career as an insurance defense attorney. She eventually transitioned into claims, working for several carriers, most recently serving as AVP of complex claims.