COULD YOUR BUSINESS SURVIVE A “ NUCLEAR ” VERDICT ? written by Marsh
Nuclear verdicts are on the rise , with the average verdict more than tripling between 2015 and 2019 , going from US $ 64 million to US $ 214 million . In 2019 alone , the frequency of US $ 20 million or more verdicts tripled compared to the average from 2001 to 2010 . These exceptionally high jury verdicts – often exceeding what would be considered reasonable damages – can threaten a company ’ s viability , causing some organizations to go bankrupt .
And as nuclear verdicts increase in frequency and severity , they are also affecting insurance pricing . Underwriters , concerned about the impact of social inflation on potential claims payouts , are reviewing their risk portfolios and adjusting pricing .
Many organizations are unable to purchase enough limits to fully transfer the risk of social inflation , underscoring the importance of implementing the necessary risk mitigation measures .
Organizations doing business in the US or with US-based companies need to consider the potential impact of a nuclear verdict and social inflation on their organization and be prepared to take action to mitigate this risk .
WHAT IS CONTRIBUTING TO SOCIAL INFLATION ?
From a $ 340 million award in compensatory damages against a large corporation to a nearly $ 301 billion verdict against a bar in Texas , social inflation – which
12 KANSAS INSURANCE AGENT & BROKER