Bermuda’s insurance and reinsurance sector has smashed records, paying out $1.1 trillion in claims from 2016 to 2024 — including $700 billion to US policyholders.

Behind this mind-boggling sum are “nuclear verdicts”, excessive payouts driven by more claims and more complex claims.

“In the nine year period from 2016 to 2024 our market had paid $1.1 trillion in losses and loss adjustment payments. And of that, $700 billion was paid to US policyholders alone,” said Chen Foley, chief claims officer, Arcadian Risk Capital, highlighted during a panel at Future Claims Bermuda at the Bermuda Underwater Exploration Institute.

What’s driving the avalanche of claims? The surge is a sign of deeper, disruptive forces at work, panellists said.

“The claims today are much more interconnected, much more data driven, and also just much more susceptible to global influences. The biggest thing is the complexity and the pace of claims,” said Nekeisha Cameron of Ark Bermuda.

Social inflation, she said, with massive jury awards, litigation funding, and mounting expectations of corporate responsibility has thrown old assumptions about losses out the window.

“We’re seeing this proliferation of high-severity, high-frequency events,” Ms Cameron added. She said that includes “nuclear verdicts”, or jury awards of over $10 million, often considered excessively high and much larger than what people might expect based on the plaintiff's damages.

Yet if the numbers are daunting, Bermuda’s response is proactive. Panellists credited Bermuda’s close-knit community of experts, located within half a square mile, who can quickly share data and strategies.

“I think one of the most beneficial things that I have found in Bermuda is just the collaboration across different companies. I have gained so much insight by just talking to my fellow claims handlers,” said Sarah Champion, vice-president of claims with Chubb Bermuda.

As claims grow in number and complexity, industry leaders in Bermuda are turning to technological solutions to some of the low-level work. “That leaves the analytics, the real meat of claims. That gives everyone the time and space to do that, and you don’t have to spend so much of your time on this admin side of things,” said Ms Champion.

However, there are limits, and the human element remains vital. “Artificial intelligence is probably no match for human experience when it comes to claims.

“You’ve still got that human experience. You still have the empathy. You still got those relationships. AI is not going to be able to pick up the phone and say hey, you know, what do you think about this claim?” Ms Cameron cautioned.

The panellists called for more oversight, especially around the hot-button issue of litigation finance. “I am hoping that we’ll have more insight as jurisdictions make rules about disclosure of litigation funding when it’s being utilised. I mean, part of the problem is sometimes we have no insight when it’s being used,” said Ms Champion.

Looking ahead, they predict that claims professionals will become “trusted advisers” who are present all the way from underwriting to resolution.

As Ms Cameron concluded: “I think you’ll see claims in the room more.”