JURY AWARDS
From 2015 to 2020 , the median cost of a jury award over $ 10 million increased from $ 20 million to $ 27 million , according to Advisen ’ s loss database .
A jury award of more than $ 10 million is considered a “ nuclear verdict ” within the insurance industry . The rise in nuclear verdicts has many insurers worried about so-called “ social inflation .”
Social inflation is a term used to describe increased loss costs stemming from claims far more severe than what could be anticipated under the usual scope of economic inflation and claims trends . It is thought to be the result of litigation funding , an erosion of tort reform , negative public sentiment toward large businesses and corporations , and jury desensitization to large awards .
According to Advisen loss data , the median cost of awards over $ 10 million remained in the low- to mid- $ 20 million range from 2005 – 2018 , before rising in 2019 and 2020 .
Product liability verdicts have also been increasing . Advisen data shows the median cost of product liability verdicts over $ 1 million rising steadily from 2006 to 2019 , with a sharp jump in severity in 2020 to pass the nuclear verdict threshold .
The increase seen in 2020 may be due to a data lag and will likely moderate as more cases are added .
Jury verdicts for commercial auto losses over $ 10 million showed a gradual increase from 2010 to 2013 — with a low of $ 12 million and a high of $ 22 million — before rising dramatically in 2019 , according to Advisen loss data . Nuclear verdicts are a primary concern for transportation companies and a factor in insurance rates . Preliminary data for 2021 shows a dramatic increase over the prior years , although this will likely moderate as more losses are added .
The impact COVID-19 will have on social inflation is still unknown . Some experts believe negative sentiments expressed toward insurers over pandemicrelated coverage could lead to increasingly severe verdicts . Others believe the job opportunities presented by large corporations will lessen the negative sentiment expressed toward them by juries in the aftermath of a COVID-19-related recession . It ’ s important to note that not all jury verdicts are final . Some large verdicts are appealed and overturned ; therefore , the loss severity of recent cases may be subject to change . +
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