Even as state-level tort reforms gain momentum across the US, jury awards in the tens and hundreds of millions continue to escalate, pushing liability costs higher and forcing insurers, corporations, and defense counsel to interrogate their playbooks.
At least one expert contends that the next battleground in the fight against so-called “nuclear” verdicts might be digital.
Steve Ellis (pictured), vice president of Sedgwick’s liability practice, believes artificial intelligence can help turn the tide by modeling trial outcomes, anticipating jury behavior, and spotting patterns, like recurring ties between attorneys and medical providers, that can shape litigation strategy.
“Predictive analytics is no longer ‘nice to have’,” Ellis said. “We already see it influencing plaintiffs, and I expect we’ll use it to counter their strategies as well.”
Advanced analytics has allowed insurers and third-party administrators to triage high-risk claims.
In attorney selection, for example, data-driven scorecards can rank lawyers by win/loss records, cost efficiency, case duration, and track record in specific venues. “When a case can be worth multimillions of dollars, you need the best attorney,” said Ellis.
The same approach can be used for picking expert witnesses and testing case themes. Mock jurors are chosen to match the local community’s demographics and attitudes, and AI analyzes their feedback to show which arguments work and which ones fail.
Sedgwick’s own litigation analysis shows that just 1.8% of litigated claims go to verdict, but when they do, the stakes are enormous. The firm has found that missteps early in the claim cycle can set the stage for disproportionate outcomes.
Ellis said the first two weeks of a claim’s life are the most critical, which is why defense teams must focus on early intervention. To better support clients, Sedgwick has developed a proprietary algorithm, trained on hundreds of thousands of claims, to flag cases most likely to result in severe outcomes.
“The first two weeks are when investigations should identify high-severity, high-complexity risks,” Ellis said. “Those claims need different workflows, involving top adjusters, experienced defense counsel, and tools like jury consultants, mock trials, and focus groups, even before litigation starts.”
Meanwhile, plaintiffs’ attorneys often invest heavily in positioning their cases from day one, backed in some instances by third-party litigation funding.
“The plaintiffs’ bar will not wait to see if the claim will settle. They are unafraid to spend expense dollars to properly position their case,” Ellis said. That might include witness canvasses, reconstructing accident scenes, or combing through social media.
At the same time, plaintiff’s attorneys are also deploying analytics to refine venue selection, model jury attitudes, pattern-match medical provider and counsel relationships, and price settlement positions with third-party litigation funding (TPLF) in mind. This makes early identification of funded cases a priority for carriers.
By contrast, defense teams sometimes delay engaging top experts until litigation heats up. Ellis said that’s a mistake: “When that ‘fraction of a percent’ claim becomes apparent, the defense should not be shy about spending expense dollars to help position the claim for its best outcome.”
Last year, US courts delivered 49 verdicts exceeding $100 million, nearly double the number from 2023, according to a report by Marathon Strategies. Of those, five verdicts topped $1 billion. The median large verdict rose to $51 million from $44 million the year before, according to litigation trend data cited by reinsurers.
Swiss Re estimates social inflation, the legal and societal forces pushing claims costs higher, is running at roughly 7% annually
Carriers are responding in several ways: reducing per-risk limits in high-exposure venues, stress-testing portfolios for verdict inflation, and refining claims playbooks to identify TPLF-backed cases earlier. Reinsurers, meanwhile, are tightening capacity for casualty cat layers and re-pricing aggregate protections.
Tort reforms in Florida and Georgia have been applauded by the industry, though some provisions in the latter have yet to take effect.
“Two years later, we’re seeing impacts: lawsuits down nearly 30% over the last two years, insurers filing rate reductions, and more insurers entering the market than leaving,” Ellis said of Florida’s progress. He also expects Texas to revisit a strong bill that nearly passed last session.
But even in reform states, nuclear verdicts have not disappeared. Rising anti-corporate sentiment, aggressive attorney marketing, and higher attorney representation rates in liability claims all contribute to the trend.
“Nuclear verdicts are multifaceted. I compare their drivers to climate change: some believe it’s happening, some don’t, but multiple forces are at play,” said Ellis. “It takes time (for tort reform) to start showing improvement. The legal ecosystem takes much longer to recover.”
Overall, Ellis is “cautiously optimistic” about the litigation environment in the next few years. But in the meantime, insurers must get comfortable with technology as a core part of their strategy.
If predictive tools can identify high-severity cases early, and if defense teams act decisively in those first two weeks, nuclear verdicts can be mitigated, if not eliminated.
