As we navigate the increasingly litigious landscape of risk management, we'd like to highlight trends related to nuclear verdicts and their impact on captive insurance. The below insights and trends can help inform your strategic captive insurance decisions moving forward:
Escalating Severity and Frequency of Nuclear Verdicts: Studies show an upward trend in nuclear verdicts, with a record number of "mega" nuclear verdicts ($100 million or more) in 2022 and 2023. The median nuclear verdict was $21 million, with product liability cases peaking at $36 million in 2022 - a 50% rise over a decade. This trend underscores the need for captive insurance solutions that can provide higher limits and more flexible coverage options to address the growing risk of extreme verdicts.
Volatility and Rebound of Nuclear Verdicts: The frequency of nuclear verdicts dropped significantly during the COVID-19 pandemic but quickly rebounded to near pre-pandemic levels by Q3 2021. This volatility highlights the need for captive insurance solutions that can adapt quickly to changing litigation landscapes. Captives can offer the flexibility to adjust coverage and limits rapidly in response to such fluctuations in verdict trends.
Long-Term Upward Trend: Excluding the pandemic years, there's an upward trend in the frequency of reported nuclear verdicts at all levels over the 10-year study period. This persistent increase underscores the growing importance of captive insurance in providing adequate coverage for large verdicts.
Source: US Chamber of Commerce Institute for Legal Reform
Cottingham & Butler's captive insurance programs, backed by dedicated claims adjusters, have achieved a 99% renewal rate across our 12 captives with 380+ members. This success emphasizes the value of specialized claims management in today's challenging legal environment. Why is a dedicated claims adjuster crucial?
Expertise in Large Claims: Specialized knowledge needed to navigate complex, high-stakes cases
Proactive Risk Management: Proactive identification of trends and potential high severity cases and implementation of early resolution strategies
Tailored Approach: Provides personalized attention to each client and for each case, potentially reducing the likelihood of nuclear verdict
Cost Control: Expertise can lead to more efficient claims handling and potentially lower overall costs