Written by Sabine VanderLinden

Imagine a routine insurance claim spiraling into a courtroom nightmare: a minor $25,000 claim balloons into a “nuclear” verdict of $7 million. If that scenario sends a shiver down your spine, you’re not alone. Claims management executives and legal professionals across the industry are grappling with an alarming surge in social inflation – the trend of rising litigation costs and outsized jury awards – that’s driving verdicts to unprecedented heights. In fact, the claims litigation market is projected to reach at least $68 billion by 2034. This reality demands a more proactive, savvy approach to claims litigation management.

In this article, we’ll explore how insurers can combat nuclear (and even “thermonuclear”) verdicts through early intervention, smarter litigation strategies, and the power of AI-driven analytics. We will also describe the mechanisms and trends driving nuclear verdicts and social inflation.

The article will present the current challenges facing the insurance industry due to social inflation and nuclear verdicts. We’ll weave in insights from industry experts – Lynn Moretti, Allen Kirsh, Dale Diamond, and David Vanalek – who recently tackled this very topic on a Reuters Event Webinar series in preparation for Connected Claims USA, sharing stories and solutions with a mix of candor and empathy. I also reached out to my dear friend Sri Ramawamy, founder and CEO of Charlee.ai, to gain some insightful commentary.

The Rising Tide of Social Inflation and Nuclear Verdicts

In today’s HIGHLY litigious environment, “outsized awards and settlements” are increasingly common risks. Social inflation generally refers to claim costs outpacing economic inflation due to factors like more aggressive lawsuits, sympathetic juries, and third-party litigation funding.

For insurers, the impact has been dramatic: U.S. liability claims costs have jumped 57% over the past decade, reaching a 7% annual spike in 2023 alone. Large companies face greater risks of nuclear verdicts due to negative social media feedback and cultural attitudes. This isn’t just a statistic – it translates to real dollars and cents that hit insurers’ balance sheets and policyholders’ premiums.

One manifestation of social inflation is the rise of “nuclear verdicts” – jury awards that exceed $10 million. These mega-verdicts have been growing in both frequency and severity since 2009. Gallagher’s analysis found a 27% year-on-year increase in nuclear verdicts in 2023, with some jury awards now soaring into the hundreds of millions. The National Law Journal's Top 100 Verdicts provides data on the largest awards and highlights trends in the size and frequency of these verdicts. Industry insiders even use the term “thermonuclear verdicts” for verdicts over $100 million (into the billion-dollar range), which have also been on the rise. In 2023 alone, 27 U.S. cases each resulted in awards above $100 million, illustrating how extreme and commonplace these verdicts have become. Juries today typically seem more willing than ever to “send a message” with hefty damages.

According to one study, 77% of jurors favor using punitive damages to punish corporations, and nearly two-thirds feel it’s vital to use verdicts to improve corporate behavior. Younger jurors often feel they must safeguard society, affecting their verdicts. This cultural shift, fueled by mistrust of big business and savvy plaintiff attorneys leveraging techniques like the “reptile theory” to stoke jurors’ emotions, creates a perfect storm for insurers. As Allen Kirsh of Zurich North America put it, many experienced claims people “focus on all the good points they have in defense and don’t always appreciate what the plaintiff brings to the table and the way the jury is going to see it”. In other words, if insurers underestimate the new dynamics of the courtroom, they may be blindsided by verdicts that bear little resemblance to the initial claim value.

When a $25,000 Claim Becomes a $7 Million Wake-Up Call

Nothing illustrates the problem better than real-world stories. During my Reuters Events panel discussion, Dale Diamond – Vice President of Claims at NAMIC’s insurance arm – shared a jaw-dropping example that could keep any claims manager up at night.

A straightforward auto liability claim arising from an accident, with apparent fault, was initially valued at around $25,000. The result at trial? A $7 million jury verdict. Seven million dollars. The small mutual insurer involved was stunned, and this wasn’t an isolated fluke but a symptom of the times. Such incidents, even when they seem minor at first, can escalate into nuclear verdicts due to litigation dynamics and how juries perceive the impact of the accident. Similarly, claims against trucking firms have seen verdicts of $30 million, $50 million, and up to $100 million, despite little or no negligence. These cases highlight the unpredictable and often disproportionate nature of nuclear verdicts.

Lynn Moretti, Head of Claims at AmTrust International, didn’t mince words in her reaction to that case. “When you talk about that claim that was valued at $25,000… that to me feels like a failure of the claims management,” she remarked. Her point is a critical one: while social inflation and aggressive plaintiff tactics set the stage for nuclear verdicts, insurers can exacerbate the problem through missteps and “unforced errors”. In this $7M verdict case, someone “missed something in that case that should have triggered them to realize, hey, the potential here is a lot higher than we think,” observed Allen Kirsh. The claim was underestimated and under-reserved; opportunities for early settlement were lost.

By the time the insurer realized the true exposure – on the eve of trial, no less – it was too late. “How many situations have we been in where it’s the eve of trial, and it’s like, Oh, we got to go up a few million because we missed something, and we are going to lose?” The “$25K-to-$7M” case perfectly encapsulates how underestimating plaintiff strategies and juror sentiment can prove catastrophic.

So, what went wrong? In hindsight, the insurer failed to spot the red flags early. Perhaps the plaintiff’s attorney had a history of driving up verdicts, or the venue was known to be plaintiff-friendly, or the claim involved sympathetic circumstances that a jury would latch onto. As Kirsh cautioned his team, “Don't fall in love with your case” to the point of blind optimism. An objective, even skeptical, assessment of each claim’s downside risk is needed. That means stress-testing your case: What will a juror really think? What angles will a skilled plaintiff's lawyer exploit? In this new era, claims professionals must assume “an uneven playing field” and anticipate the worst-case award, then act proactively to prevent it.

The High Cost of Inaction: Why Insurers Must Act Proactively

The fallout from runaway litigation isn’t limited to one claim or one carrier – it’s rattling the entire insurance industry. One large verdict can put a small insurer or even a larger company at existential risk, or force them to merge or withdraw from certain markets. Dale Diamond offered a stark example: some of NAMIC’s member companies (often small regional or farm mutual insurers) have struggled to obtain reinsurance after getting hit with a nuclear verdict, because reinsurers are either hiking rates dramatically or outright pulling out of high-risk jurisdictions. “When our members couldn’t get reinsurance, basically they’re out of business,” he explained, noting a wave of consolidation as carriers scramble to survive. In one case, Wisconsin’s legal climate (no aggregate caps on certain liabilities) led reinsurers to demand contract changes or refuse coverage – a “crisis” that imperiled several insurers. This is the macroeconomic side of social inflation: capacity shrinks and costs rise for everyone. (It’s telling that U.S. commercial casualty losses jumped to $143 billion in 2023, outpacing even global catastrophe losses.)

Large national carriers feel the strain too – if not existentially, then through deteriorating loss ratios and higher premiums. Ultimately, businesses and consumers pay the price as insurers pass on legal costs. And the problem is widespread. “We used to talk about good jurisdictions and bad jurisdictions… [now] there’s no real good jurisdictions anymore,” Diamond noted. Even venues once considered “safe” are producing verdicts that “have no relationship to the damages involved”. Social inflation has proven to be a pervasive phenomenon, eroding predictability. Various entities within the insurance ecosystem, including insurers, reinsurers, and other organizations, are all affected by the far-reaching impact of nuclear verdicts.

For insurers, remaining reactive is not an option. You simply “have to think before taking something to trial”, as Diamond urges his members. This means confronting some hard truths within claims organizations. Claims organizations must ensure that all staff are aware of the risks associated with social inflation and nuclear verdicts, and the organization as a whole needs to adapt to the changing risk landscape. Moretti pointed out that it’s easy to point fingers at the plaintiff’s bar or litigation funders for turbocharging lawsuits, “but a lot of this is also self-inflicted” by insurers’ own mismanagement. Delayed decisions, under-trained staff, denial or minimization of claim severity – these can all fuel a nuclear verdict. The cost of inaction isn’t just a big payout on one case; it’s a cycle of higher settlements across the board (as plaintiffs get bolder) and a reputation that invites the next lawsuit. Conversely, proactive claims litigation management can break that cycle. By intervening early, aligning with quality defense counsel, and leveraging data-driven tools, insurers can mitigate “runaway” litigation and protect their bottom line.

Let’s explore some key strategies that claims leaders are adopting to combat social inflation and its thermonuclear effects.

The Role of Excess Liability in Escalating Claims

Excess liability insurance has become a critical line of defense for companies facing the unpredictable world of nuclear verdicts. As the National Law Journal’s Top 100 Verdicts reveal, the average verdict size in liability cases has soared, with some awards now surpassing $100 million. This escalation means that primary liability coverage is often insufficient to shield businesses from the full financial fallout of a catastrophic claim. Excess liability policies step in to provide that vital extra layer of protection, absorbing the shock of outsized claim payments that would otherwise threaten a company’s solvency.

However, the surge in nuclear verdicts—fueled by social inflation, aggressive litigation funding, and evolving jury attitudes—has put immense pressure on insurance carriers. Insurers are now grappling with the dual challenge of more frequent and severe claims, which can quickly erode excess layers and trigger substantial payouts. This environment has forced carriers to rethink their approach to underwriting excess liability. Many are tightening terms, raising premium rates, and scrutinizing the risks associated with specific industries or jurisdictions known for high verdicts. The ripple effect is felt across the insurance industry, as companies must weigh the cost of coverage against the very real threat of a financially devastating lawsuit.

For insurers, the challenge is not just about pricing risk, but also about anticipating how litigation funding and social inflation will continue to drive up claim values. As verdicts climb and claim payments swell, the importance of robust excess liability protection—and the need for proactive claims and litigation management—has never been greater. Companies and their brokers must stay vigilant, working closely with their insurance partners to ensure that their coverage keeps pace with the evolving risk landscape.

Early Intervention: Stopping Nuclear Verdicts Before They Ignite

One of the clearest takeaways from industry experts is that early, proactive claims handling is absolutely critical. Once a claim has festered in litigation for years, racking up expenses and entrenching both sides, the chances of a nuclear outcome climb significantly. “The opportunity [to resolve a case reasonably] is within the first six months,” Lynn Moretti stressed – beyond that, positions harden and costs snowball. In the $7M verdict example, the insurer lost the window to settle on favorable terms. Moretti lamented, “Why have we set it up that our backs [are] to the wall and we’re facing a trial… when that opportunity [to settle] was within the first six months of the case?”.

Engaging appellate counsel before trial can help lower nuclear verdicts by providing a fresh perspective and identifying potential legal vulnerabilities early. In hindsight, an early intervention protocol – e.g., escalating the claim to a complex claims unit, bringing in experienced trial counsel, or pursuing mediation at the first sign of trouble – might have averted the disaster. Reviewing and understanding agreements at the outset is also essential, as this can help identify and mitigate legal risks, transfer responsibilities appropriately, and prevent costly disputes or nuclear verdicts.

Early intervention starts with better triage and risk identification. Not every claim is destined to be a nightmare: The skill is to quickly spot those that could be. This is where training and experience come in. Ms. Moretti noted that the industry’s talent gap has left many front-line adjusters underprepared: “We are losing a lot of talent… we haven’t been able to attract the talent that we need. There is no doubt that we also have had obviously bad marketing about the industry,” she said, adding that fewer newcomers receive the rigorous training that was common 25 years ago. Adjusters may not recognize a high-exposure case until it’s too late. Insurers are starting to address this by revitalizing training programs and broadening recruitment. (For example, Zurich recently removed its college degree requirement for claims roles to widen the talent pool, finding many capable candidates with customer service or military backgrounds who can excel in claims. “We eliminated [the degree] requirement… because there were so many people who had just life experience or work in customer service… and [they] have done a much better job,” Allen Kirsh shared, emphasizing how diverse hires can strengthen the claims team.) By investing in talent and encouraging a “claims excellence” culture, insurers empower their staff to act decisively and intelligently from day one of a claim. Well-trained employees play a key role in preventing costly claims and litigation by applying best practices in risk management and compliance.

Empathy and communication are also crucial in early intervention. Many nuclear verdicts trace back to an insured or claimant feeling mistreated or ignored – a dynamic the plaintiff’s attorney will eagerly exploit in court. Proactive claims management means reaching out early to claimants, acknowledging their injury or loss, and seeking a fair resolution before attorneys inflame the situation. It also means educating insureds (in liability cases) about the risks of trial and the value of prompt settlement.

Diamond mentioned NAMIC’s efforts to “educate [member companies] any way we can – through seminars, visiting their offices, meeting with their general counsel and claims team – to say you really have to think before taking something to trial”. Often, front-line claims staff or smaller insurers may not fully grasp how the legal landscape has changed; continuous education can instill a more cautious, savvy mindset. Ensuring employees’ understanding of legal risks, industry trends, and jurisdictional factors is vital for effective risk mitigation and compliance. The mantra is “get out ahead of it”, as Diamond put it – don’t wait for plaintiff counsel to set the narrative. If a case has clear liability and serious injuries, do the right thing early: evaluate it realistically and attempt a resolution before a jury is tempted to “send a message” with your checkbook.

Partnering with Defense Counsel: Aligning Strategy and Incentives

Even with the best in-house claims practices, insurers inevitably rely on defense attorneys to manage litigation. However, traditional defense counsel approaches can sometimes clash with the insurer’s early, efficient resolution goal. “Defense counsel are often in the way. They want to have 10, 15 depositions… [and] settle on the courthouse steps,” Lynn Moretti observed from experience. That delay can be deadly. Part of the problem, as Allen Kirsh noted, is cultural:

 “In terms of defense attorneys, they have notoriously been not good at sharing information and sharing tactics, while on the other side, the plaintiff’s bar obviously has.” 

The plaintiff bar is highly coordinated – they share winning strategies, form trial lawyer associations, and learn from each verdict. Defense firms, on the other hand, historically operated in silos, keeping insights to themselves. This asymmetry has given plaintiffs a tactical edge. The outcome of a dispute can also be heavily influenced by procedural and jurisdictional factors, making it even more important for defense teams to be aligned and informed.

To counter this, insurers like Zurich are actively fostering collaboration and alignment with their legal partners. Kirsh described how Zurich started a Defense Attorney Summit a few years ago, bringing together all of its staff attorneys and outside panel law firms in one forum.

“We talk about topics like reptile theory, anchoring [damage demands], how to tell a story–whatever the latest tactics are from the plaintiff’s bar,” he explained.

The goal is to get defense attorneys engaged with each other and sharing what works and what doesn’t, just like the plaintiffs’ bar does.

By breaking down the traditional walls, insurers can create a unified defense playbook to match the plaintiff bar’s sophistication. Other carriers have launched similar initiatives – essentially, turning their network of defense counsel into an extension of the claims team, all pulling in the same direction. Understanding and working with all parties involved—including insurers, brokers, legal experts, and other stakeholders—is crucial for managing litigation risks and achieving effective outcomes.

Alignment with counsel is not just about communication, but also incentives. The panelists acknowledged that the classic billable hour model in legal practice can inadvertently encourage protracted litigation.

“The financial structure of the billable hour continues to incentivize a more protracted… litigation, as opposed to maybe some type of alternative fee arrangement which creates success bonuses up front for counsel to incentivize them to try to resolve things,” observed David Vanalek, Chief Legal Officer at Richmond National.

In other words, if outside attorneys make more money the longer a case drags on, they’re not naturally motivated to settle early. Vanalek suggests insurers explore alternative fee arrangements – for example, flat fees, staged bonuses for early wins, or contingency-style payments for favorable outcomes – to “financially incentivize [defense counsel] to align [their timing] with the timing that we’re trying to achieve”. By rewarding efficiency and success (rather than sheer effort), insurers can nudge their lawyers toward the same goals: dispose of unwinnable cases quickly and focus resources on the ones that truly need a trial defense.

Another aspect of alignment is shared data and feedback. Carriers are increasingly tracking metrics on defense firms – win rates, average case durations, legal spend vs. outcome – and holding counsel accountable. In some instances, insurers are culling their panel to a smaller roster of “trial-tested” attorneys who have a track record of prevailing against the plaintiff bar’s tactics. Zurich’s summit model, for example, not only disseminates best practices but also builds relationships and trust. When adjusters, claims execs, and defense lawyers huddle together to dissect a huge verdict or a new legal development, it creates a team mentality and mutual accountability.

The defense lawyer becomes a true partner, not just a vendor. And that team can then strategize: Should we fight or settle this one? What is this plaintiff’s game plan likely to be? This level of alignment can be the difference between a coordinated defense that pre-empts a nuclear verdict and a fragmented approach that falls victim to one. Insurance, at its core, is an exchange of risk between the insurer and the insured, where premiums are traded for indemnification against specified losses, making the transactional nature of risk transfer central to legal and claims strategies.

Lastly, insurers shouldn’t forget to align internally as well. Often, the primary insurer and any excess insurers on a risk have misaligned interests or poor communication, which plaintiffs exploit. Moretti mentioned situations where the primary and excess carriers weren’t on the same page, resulting in lost opportunities early in the case. All layers of coverage must collaborate (through joint mediations, shared evaluations, etc.) so that a global settlement can be reached before a case goes nuclear. Unity of purpose – across claims handlers, underwriting (for pricing feedback), management, and defense counsel – is a powerful weapon against social inflation.

Commercial Auto Insurance: A Hotbed for Litigation Risk

The commercial auto insurance sector has emerged as one of the most vulnerable battlegrounds in the fight against nuclear verdicts and social inflation. In recent years, jury awards in commercial auto cases have routinely exceeded $10 million, with some verdicts reaching truly staggering sums. This trend is driven in part by the rise of litigation funding, which enables plaintiffs’ attorneys to pursue high-stakes cases against companies perceived to have deep pockets. As a result, commercial auto insurers and their clients are facing a challenging environment where even routine accidents can escalate into costly, high-profile litigation.

The potential risks are significant for companies operating fleets or employing drivers. Plaintiffs’ lawyers are increasingly adept at leveraging social inflation trends—such as shifting societal attitudes toward corporate responsibility and the use of emotional narratives in court—to sway juries toward larger awards. Insurance carriers, in turn, are under pressure to adapt their risk management strategies and claims handling practices to keep pace with this evolving threat.

To mitigate these risks, businesses must take a proactive approach to risk management. This includes implementing rigorous safety protocols, providing comprehensive employee training, and conducting regular audits to identify and address areas of vulnerability. By working closely with their insurance carriers, companies can gain access to specialized resources and expertise designed to help them navigate the complex world of commercial auto litigation. Insurers, for their part, are refining their underwriting practices, offering risk management services, and leveraging data analytics to help clients identify potential exposures before they result in a claim.

Ultimately, the key to surviving—and thriving—in this challenging landscape is collaboration. Companies and insurance carriers must work hand-in-hand to identify trends, share resources, and develop strategies that reduce exposure to nuclear verdicts. By staying ahead of the curve and embracing a culture of continuous improvement, both parties can better protect themselves from the financial and reputational fallout of runaway litigation.

The Technology Advantage: AI and Analytics in Litigation Management

Beyond process and people strategies, technology has emerged as a game-changing ally in the fight against nuclear verdicts. Artificial intelligence and data analytics can sift through mountains of claims information to flag risky cases, sometimes long before a human adjuster might sense trouble. AI tools can quickly summarize and analyze any document related to a claim, including agreements, medical records, and correspondence, streamlining the review process. Given the sheer volume of claims and the subtlety of some risk factors, AI-powered tools provide an extra set of eyes (and brainpower) to ensure nothing slips through the cracks.

For instance, predictive modeling can analyze historical data to predict the likelihood of a claim entering litigation or generating an above-norm settlement. Modern litigation analytics platforms ingest structured data (like injury severity, policy limit, venue, claimant demographics) and unstructured data (like adjuster notes, medical records, attorney demand letters) to find patterns that correlate with bad outcomes.

These tools produce a litigation risk score for new claims, often with impressive accuracy. AI tools enable rapid web research and complete hours of analysis in seconds, allowing adjusters to make informed decisions faster. Charlee.ai – an AI-driven claims analytics provider – reports that its system can predict which claims will require litigation with over 80% accuracy. It does so by inspecting “all sources of data within the claim file” (from adjuster emails to medical notes) and recognizing red flags that a human might miss. In practice, this means an adjuster can get an early alert for “social inflation” risk – for example, if the claim has characteristics similar to past nuclear verdict cases (certain injury types, attorney involved, county court trends, etc.), the AI might flag, “High litigation potential: engage senior counsel / consider early settlement.” Armed with that knowledge in week 2 of a claim (instead of year 2 of a lawsuit), the insurer can take proactive steps, like assigning its most experienced examiner or offering a policy-limits settlement if warranted.

One notable case study is Charlee.ai’s deployment of AI for litigation risk mitigation. Charlee’s platform delivers claim-level insights on files predicted to escalate, and even integrates with workflow tools to initiate mitigation. In a partnership with ClaimDeck (a litigation management platform), Charlee demonstrated that feeding these AI predictions into a structured litigation process led to double-digit percentage reductions in legal spend, indemnity costs, and average case life for insurers.

These workflow integrations allow AI platforms to manage and translate various types of documents efficiently, including converting images to text and handling legal or insurance paperwork securely. Essentially, by catching high-risk claims early and handling them differently, insurers avoided the drawn-out fights that generate defense bills and nuclear awards.

“We live in an increasingly litigious society, and claims costs already account for the bulk of premium dollars… We built Charlee to prevent underestimated claims from slipping through the cracks. By surfacing early litigation signals and exposure triggers, Charlee gives claims teams the foresight to act decisively—avoiding delays, reserving accurately, reducing legal costs, and settling smarter,” explains Sri Ramaswamy, Charlee’s CEO.

In practice, this might mean the AI highlights a claim as a potential “problem case” – the claims manager then fast-tracks it to a specialized litigation unit, sets an early mediation, or reserves more aggressively—the result: fewer surprises and fewer nuclear outcomes.

Advanced analytics can also incorporate behavioral insights. For example, some AI models analyze the behavior of claimants and plaintiffs’ attorneys – prior lawsuits filed, settlement patterns, even social media activity – to gauge how likely they are to push a case to trial or accept a reasonable offer. These behavioral analytics help in tailoring the strategy: a claimant who has unrealistic expectations (perhaps fueled by litigation funding obligations) might require a different approach than one who just wants a quick payout. Similarly, knowing that the opposing counsel has a history of “thermonuclear” wins alerts the insurer to bring their A-game (maybe involving a top trial attorney or consulting a jury researcher early on).

It’s worth noting that technology is a double-edged sword in this arena – the plaintiff bar is leveraging it too. AI-powered tools like EvenUp are helping plaintiff firms automate demand letters and calculate higher damages, making them more efficient and effective. Litigation funding firms use sophisticated data to decide which cases to invest in (often cherry-picking those with high verdict potential). This means insurers must embrace tech innovation just to keep pace. As one industry commentator put it, avoiding claims litigation isn’t just a “nice to have,” it’s a requirement in today’s market. Forward-thinking carriers are deploying litigation analytics, social inflation tracking dashboards, and even AI-driven settlement simulators to inform their decisions.

Charlee.ai is a prime example of an insurtech solution that is making waves.

“Charlee doesn’t just process claims—it applies pre-trained exposure intelligence to detect litigation risk before it surfaces. From a single phrase in an adjuster note or document, to a series of impacting events, under-reserved trends, injury-treatment patterns, statute limitations, or subtle demand warnings—it flags what others miss so teams can act early, not after it’s too late.”

Its AI flags risky claims and provides “social inflation scorecards,” alerting insurers to external factors (like a jurisdiction’s evolving jury trends or new laws on noneconomic damages) that might influence a claim’s value. It also performs text mining on adjuster and attorney notes to find indicators of trouble – what one might call the “sixth sense” of claims. By quantifying things like the sentiment of communications or the presence of aggressive legal language, the technology gives a fuller picture of the claim trajectory.

The payoff is tangible: faster settlements, better claim triage, and ultimately fewer runaway verdicts. One insurer's CFO, after reviewing such software, noted it’s “certainly worth investigating… for 2025” given the potential to save millions in litigation costs.

Of course, implementing AI in claims isn’t without challenges – it requires quality data, integration with legacy systems, and training for staff to trust and use the tools. But the momentum is here. As claims veteran David Vanalek highlighted, predictive analytics can be a revolution if used ethically and effectively: it helps “get the claim to the right claim professional as quickly as possible so that they’ll recognize the risk and act on it. Predictive analytics and AI are especially valuable for managing long-tail claims, such as those involving liability or asbestos, which may take years to resolve and require ongoing document and data analysis. In other words, technology should augment human expertise, not replace it. The empathetic judgment of a seasoned claims handler, combined with AI’s pattern-spotting power, is a formidable defense against social inflation.

Looking Ahead: Reshaping Litigation Strategy for the Next Decade

The battle against nuclear verdicts and social inflation is far from over, but the insurance industry is learning, adapting, and innovating. As we look to the next decade, it’s clear that claims litigation management will not be “business as usual.” The convergence of talent, strategy, and technology we’ve discussed is just the beginning of a broader transformation.

What might this future look like? For one, we can expect data-driven decision-making to become standard. Claims litigation management will typically involve data-driven decision-making and collaboration across the industry, as organizations seek to optimize outcomes and reduce risk.

Just as actuaries have long used data to underwrite policies, claims departments will use real-time analytics to decide how to handle claims (almost like an internal “early warning system” for litigation). AI in insurance claims will likely evolve from predictive models to prescriptive guidance – perhaps an AI that not only flags a high-risk claim but also suggests the best negotiation strategy based on millions of prior cases. It’s not science fiction; components of this exist today in litigation analytics labs.

We’ll also likely see closer collaboration across the industry. Insurers, reinsurers, defense firms, and industry groups might share anonymized data on verdicts and settlements to collectively understand and curb social inflation. In much the same way that health insurers united to combat fraud with shared databases, P&C insurers could pool insights on plaintiff attorney tactics, litigation funding trends, and juror attitudes. A more transparent ecosystem can help neutralize the element of surprise that plaintiff attorneys currently exploit.

Claims leaders should take a page from our panel of experts and start reshaping their litigation strategies today. This means fostering a proactive culture: encourage adjusters to speak up if they sense a claim is going south, reward early resolution of claims (not just low payouts), and treat defense counsel as part of the family. It also means continuously educating your team on the latest litigation developments – be it a new legal precedent, a novel plaintiff strategy, or a state tort reform. (Legislative changes, like the recent ones in Florida and Georgia that David Vanalek mentioned, can alter the playing field overnight. Staying ahead of those is crucial, so claims professionals can capitalize on reforms or adapt quickly if protections are rolled back.)

Finally, embrace the mindset that every claim is a story waiting to be told – and you, as the insurer, need to shape that narrative early. If you don’t, the plaintiff’s side will do it for you, often to your detriment. Use empathy in that storytelling: a jury is ultimately a group of people who can sense who took the high road. Insurers who demonstrate genuine care, fairness, and diligence in handling claims will fare better in front of jurors (or might avoid court altogether through fair settlements). In the long run, combating social inflation isn’t about beating down plaintiffs or fighting every case tooth and nail: It’s about rebuilding trust with customers, juries, and society. Technology and analytics give us new tools, but we must pair them with human judgment and ethical conduct.

In conclusion, the road ahead for claims litigation management is challenging but hopeful. By proactively managing claims, investing in people and technology, and partnering closely with defense counsel, insurers can defuse the threat of nuclear verdicts. As Lynn Moretti succinctly shared... much of the solution comes from looking in the mirror and tightening up our game. 

“These are things that we’ve known about for a long time… How are we dealing with them?”

The companies that answer that question with action – early intervention protocols, data-driven insights, and a commitment to continuous improvement – will lead the industry forward.

For claims leaders, the mandate is clear: be proactive, be predictive, and be prepared. The stakes – measured in millions of dollars and the very viability of your business – couldn’t be higher. However, with the right approach, even the most “thermonuclear” trend can be brought under control. The next verdict, the next chapter, is ours to shape.

About Charlee.ai

Charlee.ai is a patented AI platform built for claims, litigation, and risk intelligence in insurance. Pre-trained on over 60 million claims and 50,000 risk patterns across structured and unstructured data, Charlee delivers real-time insights, predictive alerts, reserving trends, and actionable benchmarks. Its models flag high-risk claims early, reduce legal costs, and support smarter settlement decisions.

Solutions like 4SeeCharlee (Predictive Analytics), DocuCharlee (Document Intelligence), FindCharlee (Fraud Detection), and AskCharlee (Query Intelligence) help insurers, TPAs, and self-insureds reduce social inflation, improve reserve accuracy, and intervene proactively.

Sources:

• Moretti, L., Kirsh, A., Diamond, D., & Vanalek, D. (2025). Panel discussion on proactive claims litigation management (Reuters Events Webinar, June 26, 2025).
• Risk & Insurance Magazine. “Social Inflation Drives 57% Surge in US Liability Claims Over a Decade”(Sept. 11, 2024). (Swiss Re analysis of social inflation impact on claims costs.)
• Gallagher (AJG) Report. “Social Inflation: The Growth of Nuclear Verdicts”(2023). (Industry research defining nuclear/thermonuclear verdicts and juror attitudes.)
• ClaimDeck News. “Charlee.ai and ClaimDeck Announce Partnership”(July 21, 2022). (Case study of AI-driven litigation prediction and results in reducing costs.)
• LinkedIn – Charlee.ai Post. “Avoiding claims litigation isn’t just a ‘nice to have’, it’s a requirement”linkedin.com (Charlee.ai, 8mo ago). (Market outlook on claims litigation growth and AI solutions.)
• Schauer Group Insights. “Trends to Watch: Social Inflation Driving Up Claims Costs” schauergroup.com (2023). (Statistics on nuclear verdict frequency and litigation funding influence.)
• Insurance Journal. “US Nuclear Verdicts Break Records and Drive Social Inflation to 7%” insurancejournal.com (2024). (Report on record number of $100M+ verdicts in 2023.