Study puts jury verdicts on trial amid sky-high legal payouts
The costs of liability claims in the United States are escalating in a self-reinforcing spiral, increasingly spurred by the abuse of the legal system instead of traditional economic factors, according to a Swiss Re study.
A blog on reinsurance from Swiss Re highlighted the behavioural shifts causing this increase, the implications for which “are both far-reaching and urgent, affecting nearly every stakeholder in the insurance ecosystem”, the company said.
A desire to hold companies accountable and high compensation demands create fertile ground for plaintiffs, often backed by third-party litigation funders.
Swiss Re’s “2025 Behavioural Social Inflation Study” draws on a nationally representative survey of 1,150 American adults presented with a series of randomised legal simulations.
By examining legal system abuse through human behaviour, the article aims to help insurers, reinsurers and defence counsel mitigate the growing pressures.
People increasingly see litigation as a legitimate avenue for justice, with three-quarters of those surveyed believing current damage awards are too low.
While there has been specific tort reform in the past, Florida, Georgia and Louisiana legislatures have now introduced reforms to cap damages, limit attorney fees and create transparency in litigation funding.
What more is needed to mitigate costs and keep insurance affordable for consumers and businesses?
The Swiss Re report emphasises the need to raise public awareness of litigation trends, as claims get more severe and more frequent, and insurers raise premiums, reduce coverage or completely withdraw from certain markets.
More expensive, less accessible liability insurance is the result that the insurance industry needs to explain, so that policyholders better understand how litigation dynamics impact their coverage.
Swiss Re said its study shows the scale and uncertainty in the American liability market, with no relief in sight from legal system abuse and the resultant pricing uncertainty.
Maintaining underwriting discipline through prudent limit structures, appropriate attachment points and rate increases that reflect the underlying loss cost trend is essential to sustaining profitability.
Defence counsel have a role to play in moderating demands with empirically grounded anchor points, that may compress the range of outcomes and steer expectations towards more moderate territory.
Insurers must go beyond the usual rate adjustments and claims strategies, and ensure disciplined underwriting, management of limits and pricing strategies.
Fair compensation must remain a cornerstone of an equitable legal system, but there should be balance; “outcomes that are reasoned, proportionate and sustainable for claimants, insurers and the communities that rely on them”.
The report states: “Restoring balance will require ongoing engagement with policymakers, the legal community and the public. Without broader tort reform and transparency around litigation practices, legal system abuse will continue to strain insurance availability, affordability and public trust. The time to act is now.”
The study found that jurors, especially younger jurors, favour plaintiffs, and injury severity is the strongest driver of verdict behaviour.
Democrats go for much higher awards — 25 per cent to 65 per cent higher than Republicans. Independents fall in the middle, but favour Republican views in some aspects.
Younger respondents were more sympathetic to plaintiffs, especially those under 40, more than 80 per cent of whom felt damages were generally too low or just right, compared with only 41 per cent of those over 60.
The report states: “At the heart of legal system abuse lies a fundamental shift in public sentiment. Litigation is no longer viewed by the average American as a last resort or an excessive burden on society.
“According to our 2025 behavioural study, just 56 per cent of respondents believe there are too many lawsuits in the US — a sharp decline from 90 per cent in 2016.
This signals a major shift in perception, with lawsuits increasingly seen as a legitimate tool for exacting justice.
Support for larger awards has followed suit; 76 per cent of respondents indicated that damages awarded in lawsuits were either too low or just right, up from 58 per cent in 2016.
This shift alters the psychological starting point in the courtroom: jurors may enter deliberations assuming that current compensation levels are inadequate. Higher awards become not just permissible but expected.
Attitudes towards corporate defendants were also trending more and more to the extreme, the study said.
When asked whether large corporations prioritise profit over safety, 85 per cent of respondents agreed.
In contrast, only half said the same about small and medium enterprises. Support for punitive damages remains strong, with 79 per cent agreeing they are the best way to deter misconduct by large corporations.
Notably, 67 per cent support punitive damages against small and medium-sized enterprises as well, which is a narrower margin than many risk managers might expect and a sign that smaller firms are not immune to growing scepticism.
These trends in attitude form the psychological foundation of jury pools nationwide. The shift is not merely ideological but also behavioural, according to the study.
Respondents were more likely to recommend compensation even in ambiguous scenarios. For example, 42 per cent said a large corporation should pay medical expenses even if it was not directly at fault, compared with 29 per cent for SMEs. This suggests a default assumption of corporate responsibility — a mindset jurors may carry with them into the courtroom.
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