Social Inflation: Fighting Back Against the Rise in Nuclear Verdicts
Joe Moriarty, Esq.
August 27, 2025
Over the last few years, insurance carriers and industry professionals have been probing the causes behind the significant uptick in runaway verdicts. Many point to “social inflation,” i.e., the factors increasing insurers’ claims costs above normal economic inflation. Social inflation is typically blamed on three main factors: (1) shifts in society’s perception of litigation, including public sentiment about corporations and the appropriate risk-bearing party; (2) increased involvement of third-party litigation funding in bodily injury and wrongful death claims; and (3) plaintiffs’ attorneys’ use of aggressive psychological tactics, such as the reptile theory and anchoring, that influence jury decisions by playing to their emotions and bias.
The large awards, so-called “nuclear verdicts,” are jury awards worth $10 million or more. The U.S. Chamber of Congress Institute for Legal Reform recently published a paper examining 1,288 nuclear verdicts in state and federal courts from 2013-2022. The paper reported that although nuclear verdicts dropped off significantly while courts were closed due to the COVID-19 pandemic, they “quickly rebounded to near-record highs by the third quarter of 2021.” For example, product liability nuclear verdicts rose to a median value of $36 million in 2022 from a starting median of $24 million in 2013, representing a 50% increase.1
This social inflation phenomenon significantly increases liability claims costs. The most significant effects are observed in the commercial liability markets, with the commercial auto and products liability segments hit hardest. The Insurance Information Institute collaborated with the Casualty Actuarial Society to measure the excess losses that cannot be explained by regular increases in economic inflation. The analysis attributed $20.7 billion in commercial auto losses from 2010 to 2019 to loss-development factors unrelated to general inflation. This amount is equal to 14% of the total $148 billion in claims paid during that time.
Social inflation impacts more than just insurance carriers and large corporations. Insurance carriers react to higher costs and loss ratios by increasing premiums, and markets prone to nuclear verdicts see a higher frequency of increased premiums. This impacts many small businesses, including owner-operator trucking companies. Ultimately, the higher costs are passed through to consumers, who pay for more costly products and services. If not combatted and reigned in, social inflation may cause significant insurability problems, especially in the trucking industry, which plays a critical role in the nation’s supply chain and economy. Thus, a deeper analysis of the three main drivers of social inflation is timely and critical.
Societal Shifts Against Corporations
Jurors’ biases against large corporate defendants in serious personal injury and wrongful death lawsuits is hardly new. The plaintiffs’ bar historically attacked large corporate defendants to entice higher jury awards—it is the classic plaintiff’s trial theme of pitting a sympathetic injured individual against a greedy corporate behemoth (“people vs. profit”). In recent years, though, jurors are becoming more receptive to these anti-corporate arguments. Indeed, confirmation bias tells us that when a person’s previously existing beliefs or biases align with your story, it becomes easier to convince them your story is true. In recent years, the public’s view of large corporations has become much more negative. In a recent Pew Research survey, 71% say corporations negatively affect the country’s trajectory. This means that the plaintiffs’ bar’s classic story resonates with more individuals’ personal biases, increasing the chances of nuclear verdicts.
The public is inundated with these large numbers, usually attributed to large corporations, which takes the sting out of requests for outrageous jury awards against corporate defendants. Our ability to comprehend numbers logically decreases as the number increases—for example, the human brain has difficulty comprehending how much more a billion is than a million. Juries are faced with the same conundrum. Not only are jurors ill-prepared to determine the damage awards at trials, but they poorly understand the true magnitude of money the plaintiff’s attorney is requesting. This disparity creates a vicious cycle of nuclear verdicts reported in the media and in plaintiff attorneys’ advertisements, and these reports consequently influence future jurors’ awards.
Third Party Litigation Funding
The United States is the world’s largest third-party litigation funding market. Litigation funding companies finance tort and commercial litigation, and American litigation funders account for a 52% share of the global, multi-billion-dollar industry. They are not just supporting large commercial and mass torts lawsuits, but also individual personal injury lawsuits.2 In personal injury cases, this essentially acts as a cash advance with a “no win, no fee” provision. The catch for the personal injury plaintiffs is that the interest rates charged are much higher than for traditional loans. Lawsuits in various states have challenged the interest rates charged under usury statutes to varying success. These litigation funding agreements also raise ethical concerns because they require the plaintiff’s attorney to sign-off and participate in the loan by providing the finance company with case information and documents.
Litigation funding agreements can negatively impact the settlement process. Litigation funding increases the costs of settlements because plaintiffs are usually unwilling to agree to a settlement that puts little-to-no money in their pocket after legal fees, costs, and repaying the litigation funder.
Psychological Tactics: The Reptile Theory and Anchoring
The final major driver of social inflation is the increased use of psychological tactics to manipulate juries into returning inflated damage awards. One such method, coined the “reptile theory” by authors David Bell and Don Keenan in their book Reptile: The 2009 Manual of the Plaintiff’s Revolution, focuses on society as a whole and not the specific case. Bell and Keenan theorize that plaintiffs’ attorneys use reptilian tactic phases (e.g., “safety rules,” “personal safety,” “protecting the community,” “unnecessary harm,” and “needless endangerment”) in order to trigger the reptilian part of the brain responsible for basic life functions and to overcome the cognitive parts of the brain. By linking each argument to a juror’s sense of personal or community safety, the attorney encourages the jurors into using emotion or a sense of danger rather than the facts and legal standards to decide the specific case. It further focuses the damages, not on the specific plaintiff, but on the larger potential harm to the community.
Another psychological tactic is anchoring, in which the plaintiff’s attorney requests an exorbitantly high damages award to arouse the jury’s sense of expected fair compensation. When a jury relies too much on the first number received (the anchor), they engage in anchoring bias, a mental error in which that first number serves as a relational point for all further decisions. People can easily become anchored to arbitrary numbers, even if irrelevant to the current situation.
Fighting Social Inflation
There is no denying the recent trend in social inflation and the rise in nuclear verdicts. It remains true that the most impactful litigation technique to avoid an unsupported nuclear verdict is to avoid litigation altogether. Claims with likely liability should be pushed aggressively towards early settlement. Even when liability is disputed, if the potential exposure is significant, an early proactive approach should be taken to resolve the claim for a discounted amount. The most impactful strategy is to identify and resolve the claims most susceptible to going nuclear early in the claims process long before putting decisions into the hands of a jury.
The stakes could not be higher. Left unchecked, the strategy of using social inflation to drive bigger and bigger verdicts is potentially catastrophic for a wide range of stakeholders – including those who never directly face a lawsuit. But engaging in early settlement negotiations, rebutting reptilian tactics and anchoring bias, and using trial themes that pass the “gut check” or “smell test” of jurors may help reverse the tide of nuclear verdicts.
Joe Moriarty Esq.
Joe Moriarty is a Partner with Willcox Savage, P.C., specializing in civil litigation. When he is not helping clients resolve claims, you can find him photographing the sunrise or sunset over the Virginia Beach oceanfront.
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