In an increasingly litigious world, preventative legal, educational and reputation management services can provide critical layers of additional protection to better insulate insurance carriers, organizations and entrepreneurs against nuclear verdicts and other existential threats to enterprises. (Credit: sumaji/Free Use Image)
Doing business in 2025 is expensive.
Insurance premiums are a major factor, driven partly by nuclear verdicts that have dramatically increased liability exposure. These verdicts — jury awards that exceed $10 million — are fueling social inflation and creating more risk for insurers and insureds alike.
Between 2013 and 2022, nuclear verdicts increased by 23% for auto accidents, 20% for medical liability, 23% for product liability cases and 14% for premises liability, according to the U.S. Chamber of Commerce Institute for Legal Reform. These percentages are growing, driving higher insurance costs for small to mid-size businesses (SMBs) while reducing coverage options.
Nuclear verdicts also exceed policy limits, exposing insureds to catastrophe while creating large losses for insurance carriers.
There are solutions available to save carriers and their insureds millions in losses. However, many of the most effective solutions stand apart from policy language or exclusions. A range of legal, education and reputation services can help bridge gaps that are often outside of insurance coverage.
For carriers savvy enough to recognize the harm of nuclear verdicts, providing or recommending these services may help to avert financial disaster both for them and their policyholders.
Legal protections
For many business leaders, entrepreneurs and non-profits, legal services are seen as too costly. Some avoid accessing them altogether. To further reduce risk and improve customer experiences, a growing number of carriers are offering bolt-on legal services to add value as well as avoid costly litigation.
This was the impetus for our company's recent expansion into the U.S. of our AI-driven and attorney-supervised risk protection services. This proactive and hybrid approach combines AI efficiency with human legal expertise to include digital legal document preparation, ask a legal question, attorney document review and mediation insurance.
When carriers incorporate affordable legal services as bolt-ons to commercial or personal insurance policies, these services not only reduce legal costs for the consumer, but they also empower policyholders to mitigate their risks beyond insurance coverage.
For example, if a policyholder is hiring contractors for a major home renovation, they may be operating without any written agreements or using template documents provided by the contractor. This lack of proper, specific documentation leaves homeowners and their insurer exposed to significant disputes over change orders, material delays or quality standards. Similarly, commercial policyholders such as contractors engaging subcontractors may lack proper subcontractor agreements, creating unnecessary exposure when disputes arise over scope, payment terms or work quality. Using carrier-approved bolt-on legal services ensures properly structured agreements for consumers and commercial clients, helping to avoid costly litigation that could escalate to nuclear verdicts.
Because of the negotiating power of many carriers, these legal bolt-on services can be baked into an insured's annual premium at a fraction of what similar, stand-alone legal services might otherwise cost, creating a differentiator for insurers and an attractive value-add for policyholders.
The educational approach
There is no substitute for preparation. Carriers that provide bolt-on litigation readiness training, or recommend providers offering such services, help educate SMBs and non-profits on how legal processes work, the importance of document preservation, compliance and protocols for communicating within the organization to help mitigate risk. Litigation readiness training offers organizations a window into what lawsuits might look like, how they work, what they may face in court and provide the tools to better protect the organization.
Smaller organizations and entrepreneurs often cannot afford a costly legal defense, much less pay out in cases of nuclear verdicts that exceed policy limits. Litigation readiness training can help these leaders, and their employees, avoid common mistakes that can create and drive expensive lawsuits. Such training also helps to foster a culture of compliance and, should the worst occur, speed response times in support of their legal defense.
Adjacent to litigation readiness training are social inflation briefings. Just as understanding the impact of nuclear verdicts can help SMBs better understand their risks, a social inflation briefing offers a broader, more comprehensive overview to provide a similar benefit. Insurance carriers, actuaries and legal professionals with insurance industry experience can help SMBs make better decisions about their insurance coverage options, improve risk management practices and future-proof their operations from potential litigation based on their specific risk model.
Risk engineering audits take a slightly different approach, identifying potential workplace hazards, operational risks and gaps in compliance across a range of worker safety and regulatory requirements. These audits typically result in safety improvement recommendations to reduce workplace risks, new or enhanced safety protocols and may, in some cases, help reduce insurance premiums when the audit's recommendations are incorporated.
Reputations matter
Completely eliminating all risk for SMBs and non-profits is an ideal state that is hard to reach. This is why organizational leaders and entrepreneurs need to consider the risk to their reputations in worst-case scenarios.
Lawsuits not only threaten financial stability, they can also erode the trust in an organization among its most important stakeholders as well as the public. Employing reputation management services when litigation is threatened or realized ensures an opportunity to provide timely, accurate communication to protect the organization. Bringing in a crisis communications public relations agency can help correct false information and gossip while reassuring stakeholders. Doing so gives the organization a chance to tell its side of the story in situations that are often fast moving and require a quick response to the media and other key constituencies.
Averting disaster requires planning.
Risks to insurers, entrepreneurs, SMBs, as well as non-profits, are continually on the rise. In an increasingly litigious world, comprehensive policies alone simply aren't enough. Pursuing preventative legal, educational and reputation management services, either as policy bolt-ons from carriers or as stand-alone services, can provide critical layers of additional protection to better insulate insurance carriers, organizations and entrepreneurs against nuclear verdicts and other existential threats to enterprises.
Grahame Cohen is founder and CEO of Epoq North America, a legal Insurtech protecting businesses and consumers from legal and compliance risks since 1997, with services provided to more than 60 major brands and insurance carriers in the U.S., Canada, U.K. and Republic of Ireland. He can be reached by sending an email to grahame@epoqlegal.com.
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