Instant Insights / The Business of Insurance

What's happening in insurance today? From market changes and M&A activity to new coverages, the insurance industry is ever-evolving. To stay up-to-date on the business, these articles, which are updated regularly, will help insurance professionals maintain a competitive edge.


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Stemming the tide of social inflation Defense attorney Robert F. Tyson, Jr., believes that insurance companies have the power to do away with nuclear verdicts. (Photo: Shutterstock)

The rise of social inflation in the insurance industry or nuclear verdicts, as they are known in the legal industry, is creating a chilling effect for insurers. Jury verdicts have been steadily climbing for at least 10 years but seemed to reach an all-time high more recently.

Defense attorney Robert F. Tyson, Jr., managing partner of the California-based law firm Tyson & Mendes, finds that the number of jury verdicts over $10 million have risen dramatically since 2009 when the ‘reptile theory’ came out. “That changed the way plaintiffs lawyers tried cases. The great recession was also well underway then,” explains Tyson. “Since then, insurers have not been focused on nuclear verdicts. They took a hard look at expenses and their lawyers focused on cutting expenses for these cases, while plaintiffs focused on indemnity.” It was this disconnect that aided the rise of social inflation for claims-related cases.

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Patricia L. Harman

Patricia L. Harman is the editor-in-chief of Claims magazine, a contributing editor to PropertyCasualty360.com, and chairs the annual America's Claims Event (ACE), which focuses on providing claims professionals with cutting-edge education and networking opportunities. She covers auto, property & casualty, workers' compensation, fraud, risk and cybersecurity, and is a frequent speaker at insurance industry events. Contact her at [email protected]

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