In 2023, the U.S. witnessed a surge in so-called “nuclear verdicts™,” with 27 court cases each awarding over $100 million in damages. This trend has propelled social inflation—a term describing the rising costs of insurance claims beyond economic factors—to a 20-year high of 7%. Developments like these are reshaping the landscape of liability insurance, leading to increased premiums, reduced coverage limits, and heightened underwriting losses.
A recent Financial Condition Report by Swiss Re highlights that U.S. commercial casualty insurance losses have grown by an average of 11% annually over the past five years, reaching $143 billion in 2023 and surpassing the global insured losses from natural catastrophes in the same year. Industries like construction, manufacturing, and chemicals have seen significant reductions in liability coverage limits, with some experiencing drops of up to 60%.
At Horst Krekstein & Runyon, we are committed to guiding our clients through these complex challenges. Our expertise in navigating the intricacies of insurance law ensures that insurers are well-equipped to respond to the pressures of social inflation. We will continue to monitor these trends and provide insights to help our clients make informed decisions.
The term “nuclear verdict™” is a registered trademark owned by Robert F. Tyson, Jr., Esquire.