For UK brokers placing US liability risks or supporting multinational clients, “nuclear verdicts” are emerging as a growing exposure.
Jury awards reaching tens or even hundreds of millions of dollars have surged across the United States in recent years, contributing to mounting social inflation and forcing insurers, including those writing US risks through the London market, to reassess pricing and underwriting appetite.
According to Bob Tyson (pictured left), founding partner, and Ashley Fetyko (pictured right), partner, head of growth & client engagement at Tyson & Mendes, plaintiffs’ lawyers have fundamentally changed how they present cases to juries by relying on behavioural psychology to drive larger awards.
“Whether trying a case in front of a judge or a jury, the biggest obstacle is anger,” Tyson said.
One of the key drivers behind the trend is the rapid growth of third-party litigation funding.
“Third-party litigation funding is a tremendous issue,” Fetyko said. “It has become really significant within the United States, and I suspect it is growing globally as well.”
Under these arrangements, funders cover plaintiffs’ legal costs in exchange for a portion of any settlement or verdict. Fetyko said this removes many of the financial pressures that historically limited weaker cases from progressing through the courts.
“Claims that typically would have been filtered out, because a plaintiff’s lawyer might not take on a case when there is no legal merit or no value associated with the case, are now supported,” she said.
The presence of litigation funders can also prolong disputes and complicate settlements.
“In the long run, costs are driven up,” she said. “That, in turn, funds and fuels nuclear verdicts, which are disproportionate and unjust outcomes.”
While litigation funding has increased the number of claims entering the system, Tyson said the most significant shift has occurred inside US courtrooms, where plaintiffs’ lawyers increasingly rely on behavioural psychology.
“Historically, the number-one emotion plaintiffs went for was sympathy,” he said. “Now the emotion they are going for is anger.”
Rather than focusing primarily on the plaintiff’s injuries, Tyson said lawyers increasingly frame cases around the conduct of the defendant in ways designed to provoke juror outrage.
“They are trying to get juries angry at our clients,” Tyson said. “The focus has shifted from the plaintiff and her injuries and sympathy for her.”
That shift has also changed how damages are discussed at trial, with lawyers anchoring jurors to increasingly large figures.
“They now ask American jurors for a big number,” Tyson said. “The bigger the number they ask for, the bigger the number they get.”
The largest awards typically emerge in personal injury litigation rather than purely financial disputes. “Nuclear verdicts only happen when there is a possibility of non-economic damages - pain and suffering,” Tyson said.
Several sectors have proven particularly vulnerable, including transportation, employment disputes, medical malpractice and sexual abuse litigation. For brokers placing US liability programmes, those areas have become increasingly difficult to insure as verdict sizes push carriers to raise deductibles, narrow coverage terms or withdraw capacity.
The trucking industry in particular has been hit hard by large verdicts, placing pressure on insurers writing those risks.
The geography of nuclear verdicts is also expanding. Once concentrated in a handful of plaintiff-friendly jurisdictions, large awards are now emerging across a much wider range of venues.
For insurers outside the United States, the biggest challenge may be recognising how quickly the litigation landscape has evolved. Fetyko said some insurers assume the risk is limited to catastrophic cases or historically plaintiff-friendly venues.
However, plaintiffs’ lawyers increasingly collaborate and share successful strategies, accelerating the spread of nuclear verdict tactics across jurisdictions and case types.
“Before you go to trial, you need to figure out what is going to get a jury angry about your case,” Tyson said. “If you cannot figure that out, you are going to be at serious risk.”
For insurers and brokers managing US exposures, that means evaluating not just the legal merits of a claim, but also how it may be perceived by a jury.
