News & Insights

Home » News & Insights » Litigation news—US Juries create $200 billion headache for all types of insurance companies

Litigation news—US Juries create $200 billion headache for all types of insurance companies

Liability, Litigation, Other

The Financial Times reported yesterday that the global insurance industry is facing massive new liabilities from US juries, which have been rapidly stepping up awards to plaintiffs across the board—from tainted diapers to medical malpractice to motor insurance. Overall, the incidence of $10 million dollar or more payouts has tripled in the United States for professional liability cases in just the past three years. [1]

For insurance companies, this represents an unfavorable headwind at a time when the industry faces a squeeze on profits, with the need to increase reserves for larger payouts a further burden. Although many corporations believed the battle over tort reform had been won ten years ago, experts interviewed for the article note the “growing social mood against big business” has led many juries to “think they can hold big companies to account without consequence.”

Underwriters note that large awards tend to have a snowball effect, with future plaintiff demands inflating and eventually trickling down into day-to-day claims. The FT also notes the increased aggressiveness of damages litigation is also fueled by litigation finance firms—including publicly traded firms which court investors to back lawsuits financially in return for a cut of any awards. Although some industry insiders believe this new inflation of payouts will be sorted out in time by higher premiums to reflect the increased risk, this shift remains notable and worth keeping an eye on for those involved in complex litigation.

[1] Ralph, O. (November 2019) US jury payouts leave insurers ‘facing $200bn hole’ from Financial Times Accessed November 22 2019

Recent Posts

Impact of Shorter COVID-19 Quarantine on Workplaces

On Monday, the CDC announced changes to its recommended isolation and quarantine time from 10 days to 5 days for asymptomatic people with COVID-19. They recommend that people leaving isolation after 5 days continue to wear a mask for the following 5 days. The CDC also...

Restaurants Sue Over Vaccine Mandate

Restaurant operators sued Mayor Bill de Blasio and New York City over Key to NYC, the new indoor vaccine mandate program, on August 17-the same day the mandate went into effect. A group of restaurants in Staten Island, through the Independent Restaurant Owners...

Financial Regulators’ New Target: Social Media Influencers and SPACs

The Financial Industry Regulatory Authority (“FINRA”) will conduct three new regulatory sweeps in an effort to combat various activities causing extreme fluctuations in the financial markets. FINRA has chosen to target special purpose acquisition companies (“SPACs”),...

Does WARN Apply to Virus Closures?

Enterprise, in Benson et al. v. Enterprise Leasing Co. of Florida LLC et al., has tried to argue that the Worker Adjustment and Retraining Notification Act (“WARN”), through its natural disaster exception, does not apply to closures caused by COVID-19. Two Florida...