In a March PropertyCasualty360 article, Claims magazine Editor-in-Chief Patti Harman wrote that "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." The trend has picked up steam over the past decade since the introduction of the 'reptile theory,' with jury verdicts against insurers increasingly surpassing the $10 million mark.
Nuclear verdicts have become such an issue for insurers that many are employing data tools, such as artificial intelligence and predictive analytics, to decide whether to settle claims or take them to court.
But in the insurance industry, in particular, there is perhaps no other area where nuclear verdicts have gained more notoriety than in the commercial auto space.
"What we think happened in commercial auto was that there were changes in commercial trucking regulations … and the plaintiff's bar found a way to systematically start getting settlements in the $5 million, $8 million range," Jim Lynch, chief actuary and SVP with the Insurance Information Institute, told ALM sister site Law.com. "They discovered that, instead of blaming the individual driver, they could blame the employer or company [by saying] he was overworked or insufficiently trained or something."
According to Lynch, other factors such as litigating financing and societal perceptions also contribute to more nuclear verdicts in the courtroom.
In the infographic below, we spotlight the top 10 biggest motor vehicle accident verdicts to date. Hover over the graph for more details.
This infographic highlights 10 other motor vehicle accidents that led to significant insurer settlements.
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