Since 2020, the number of so-called ‘nuclear verdicts’ has more than tripled — and the median verdict in that time period has more than doubled, Allianz Commercial says in a recent press release.
A pressing issue in cross-border trucking and other insurance lines of business, nuclear verdicts describe court awards to plaintiffs exceeding $10 million. In 2023 alone, these awards grew by more than 27%, says Allianz, citing data from Marathon Strategies. What’s more, data show ‘thermonuclear verdicts’ awards of more than $100 million rose by 35%.
The Allianz report doesn’t provide specific data on verdict trends in Canada. It simply notes certain litigation trends worth monitoring.
“On the topic of PFAS [known as ‘forever chemicals’ that do not break down over time], what we can say is that while litigation has so far been concentrated in the U.S., we are starting to see cases elsewhere, including in Europe, Australia and Canada,” the insurer tells CU. “A class action suit was recently initiated in Quebec, for example.”
Further, Allianz points out that ultra-high-dollar verdicts by U.S. courts also affect international companies doing business in the States and globally.
Looking at causes of insurance liability claims over the past five years, the report notes: “Defective product incidents account for more than 40% of the value of all claims, with the other most expensive causes of claims including collision/crash incidents, faulty workmanship/maintenance and bodily injury.”
Liability drivers
In that context, the firm identifies loss trends that bear watching:
Increasing nuclear verdicts
Several factors drive the rising frequency and severity of verdicts, including mistrust of corporations, emerging plaintiff attorney tactics, lack of tort reform, changing jury demographics, normalization of high verdicts, and increased punitive, compensatory and non-economic damages such as pain and suffering. “Such upwards trends in social inflation are not sustainable for the long term,” says Joerg Ahrens, Allianz Commercial’s global head of key case management of long-tail claims.
PFAS litigation mounts
‘Forever chemicals’ used since the 1940s in consumer and industrial products like food packaging, cosmetics, and fire retardants are sparking suits related to environmental pollution, water and waste treatment or contamination, and personal injury.
Settlements are reaching “the double-digit billions of dollars,” Allianz notes in its report. It adds “further regulatory measures may play a part in shaping” future litigation trends.
Pharma class actions
A growing number of pharmaceutical, food, and chemical products are targeted for billion-dollar class action suits. These include opioids, talcum powder, indigestion remedies and herbicides.
Also, “scientific research, regulatory orders or voluntary withdrawal of products that may be carcinogenic can trigger litigation,” says Allianz’s report. “Such claims create volatility for liability insurance due to the long latency of cancer symptoms, with risks only understood many years after a product was sold, and the insurance underwritten.”
Class actions outside U.S.
Although viewed as a U.S. phenomenon, social inflation is on the rise in Europe, the report notes.
Feature image by iStock/RomoloTavani
