The insurance industry is intensifying its campaign against outsized jury awards or “nuclear verdicts” – verdicts over $10 million. At least one expert has noted meaningful progress in several battleground states.
In April, Georgia Gov. Brian Kemp signed two Senate Bills geared toward improving the litigation environment in the state.
SB 68 is a package of tort reforms to improve fairness in Georgia’s legal system by curbing lawsuit abuses that impact consumers and small businesses. Key changes include limiting negligent security liability to controllable factors, requiring medical damages to reflect actual costs, allowing bifurcated trials, and demanding real evidence for pain and suffering claims. SB 69 aims to protect consumers from predatory lenders and foreign adversaries by increasing transparency.
At the same time, reforms enacted by Florida in 2023 are offering early signs of relief for insurers and businesses alike, according to Allen Kirsch (pictured), head of claims, judicial and legislative affairs at Zurich North America.
“By all objective measures, the reforms are working (in Florida),” Kirsch said. “Rate requests have flattened or even gone negative for the first time in years. Citizens (Florida’s insurer of last resort) has seen its policy volume drop. I’ve heard 11 new companies want to enter the Florida P&C (property and casualty) market. That’s a good indicator of renewed stability and competition.”
Kirsch, who leads an internal task force against social inflation at Zurich, also noted regulatory momentum in other states such as Louisiana and South Carolina. Despite some progress in tort reform, the insurance industry must remain vigilant, he said.
Escalating payouts have become a defining feature of the US legal landscape. As the sizes of nuclear verdicts mount, clients are voicing increasing concern about the ripple effects on liability insurance rates, capacity, and retention limits.
“We’re all seeing how nuclear verdicts and social inflation in general have an outsized impact on claim costs. It just keeps going up and up,” Kirsch said. “There's also concern among clients around third-party litigation funding, although that’s probably a bit less understood.”
Litigation funding is when a third-party investor provides financial resources to a litigant or plaintiff to pursue a legal claim, in exchange for a share of the recovery if the case is successful. The practice has raised concerns about potential conflicts of interest. One of the main ethical concerns around litigation funding is the lack of transparency, as plaintiffs don’t often disclose whether they receive third-party funding.
“More and more legislators are pushing for rules requiring disclosure (of third-party litigation funding) and clarity around conflicts of interest and permissible actions,” said Kirsch. “That’s a step in the right direction.”
Zurich has taken a coalition-based approach to social inflation, bringing insurers, brokers, and customers together to tackle the main drivers. Kirsch said they are working with the local Civil Justice League and national groups like APCIA and the US Chamber of Commerce to support reforms.
Aside from the coalition work, Zurich is also pushing on internal fronts, educating clients, preparing defense attorneys, and organizing summits.
Kirsch said this collaborative approach is critical amid pushbacks on reforms in Florida. Several plaintiffs' law firms and advocacy groups have filed lawsuits challenging key provisions, arguing that the new rules unfairly limit access to the courts and violate constitutional protections.
Critics have also taken aim at the shortened statute of limitations and the elimination of one-way attorney fees. Some lawmakers face pressure from constituents and local bar associations to revisit or roll back aspects of the legislation.
“There’s always going to be that push-pull,” said Kirsch. “That’s why we need to remain vigilant – not just Zurich, but the whole industry.”
The insurance industry’s coalition work continues to expand. An inaugural in-person symposium in 2022 drew 50 to 60 people. Last year, that number had grown to 250. Another one is scheduled for later this year, and is expected to draw carriers, brokers, customers and trade associations to exchange insights on social inflation and coordinate efforts.
“(The coalition) is growing, and with it, our ability to make an impact,” said Kirsch. “It’s partly our answer to the plaintiffs’ bar, which is well-organized and shares information effectively.”
Brokers can play a bigger role in the movement. “Larger ones usually have government affairs teams. Getting them involved is a start,” Kirsch said. “But brokers are also in a position to advise customers directly, both on social inflation drivers and on advocacy.”
Ultimately, social inflation, nuclear verdicts and litigation funding are complex, multifaceted issues that require a short-, medium-, and long-term strategy, according to the Zurich executive.
“Tort reform is the long game,” Kirsh said. “It takes time to pass and even longer to see the effects. In the short term, brokers can help prepare clients for litigation and improve risk mitigation efforts. My team regularly meets with brokers to educate new folks, raise awareness, and share best practices.
“It all starts with understanding. From that comes engagement, and that’s how change happens.”
