Jury verdicts against Meta and Google in two US states last week could trigger litigation that reshapes how insurers and reinsurers price long-tail casualty risk, Moody's has warned.
The concern is not the size of the awards but the legal theory behind them: that platforms designed to maximize engagement can be held liable for compulsive use and its consequences.
A New Mexico jury on March 24 found Meta liable under the state's Unfair Practices Act, imposing $375 million in civil penalties across 37,500 violations. Attorney General Raúl Torrez alleged Meta made misleading safety claims while driving engagement contributed to harms involving minors.
The penalty "should send a clear message to big tech executives that no company is beyond the reach of the law," Torrez said. Meta has said it intends to appeal.
A day later, a Los Angeles jury found Meta and Google liable in K.G.M. v. Meta, Google, et al., awarding $6 million in combined compensatory and punitive damages. Responsibility was split 70% to Meta and 30% to Google.
The Moody's authors warned the real risk lay not in individual outcomes but in claims multiplying across jurisdictions.
That is already happening. More than 40 attorneys general have to date filed suit against Meta in one of the largest coordinated actions against a technology company. TikTok faces suits in over a dozen states. Florida and Kansas have separately targeted Snap.
Read more: Meta, Google hammered by huge new court case
Courts have almost universally found that Section 230, the federal law shielding platforms from liability for user content, does not apply when claims target addictive product design. Further bellwether trials are set for mid-2026.
State legislatures are piling on. Arkansas has enacted a law giving parents a private right of action. New York, California, and Oklahoma have introduced bills on platform liability for content promoted to minors.
A February ruling in Hartford Casualty v. Instagram found certain insurers had no duty to defend Meta, concluding the alleged harms did not constitute an "accident." Meta plans to appeal that ruling too.
Gen Re had earlier flagged the core dilemma: whether insurers must defend against lawsuits alleging intentional but legally unproven acts, or whether such claims fall outside general liability coverage. A National Law Review analysis notes standard tech errors-and-omissions policies contain bodily injury exclusions that would also bar addiction claims.
Husch Blackwell warns the verdicts could reshape how the industry handles coverage, loss aggregation, and long-tail risk across general liability, directors' and officers', and cyber lines, with ripple effects through the reinsurance market.
Swiss Re research published before the verdicts had identified social media addiction as an area where public nuisance theory gives plaintiffs an easier path to proving liability.
A key question is whether addictive software design constitutes one insurable "event" or thousands of separate occurrences, a distinction that will shape how reinsurance treaties respond.
Moody's first flagged addictive software design as a liability risk in 2018. In a 2022 analysis, the firm's David Loughran put the expected economy-wide loss at roughly $15 billion, with a 5% chance of exceeding $70 billion.
