The shifting cultural attitudes of jurors, particularly regarding corporate accountability, are significantly influenced by the increasing presence of millennials on jury panels. This demographic shift is contributing to the remarkable rise in nuclear verdicts. These verdicts, characterized by staggering payouts, have been shaking up the insurance industry, prompting a closer examination of the factors contributing to their rise and their implications for insurers, policyholders, and trial attorneys alike.

What are Nuclear Verdicts?

A “nuclear verdict” refers to jury awards in civil cases that are significantly larger than expected. Generally, nuclear verdicts exceed $10 million, and often times reach into the hundreds of millions or even billions of dollars. These verdicts, particularly prevalent in cases involving insurance bad faith, are causing a stir due to their sheer magnitude and their potential to significantly impact insurance premiums, industry practices, and legal strategies.

Trends in Nuclear Verdicts

In recent years, there has been a noticeable uptick in the frequency and size of nuclear verdicts. Based on our experience and research, we have identified the following trends:

1. Emphasis on Corporate Accountability: There's a growing trend of holding large corporations, including insurance companies, accountable for their actions, particularly in cases where bad faith practices are alleged. Public mistrust in large corporations and widespread anti-corporate sentiment – especially among millennials – play a significant role in nuclear verdicts. Plaintiffs' attorneys are adept at framing the narrative to highlight corporate negligence or malfeasance, which can sway jury opinions and lead to substantial verdicts. Instances where questionable or unethical practices by corporations are prevalent have also been proven to contribute to nuclear verdicts.
2. Increased Jury Sympathy: Juries seem to be more sympathetic towards plaintiffs, especially when they perceive insurers as acting in bad faith or prioritizing profits over policyholders' interests. The same is true when jurors perceive corporations are placing profits over customer or employee safety. This heightened empathy often translates into larger awards, aiming to punish the insurer (or corporation) for perceived wrongdoing. In a recent bad faith trial culminating in a nuclear verdict, we were tasked with conducting post-trial juror interviews. In these interviews, jurors expressed criticism towards the insurance company for their handling of the claim, treatment of the insured, and overall unapologetic demeanor during the trial.
3. Subjective Assessments: According to a 2024 study conducted by the Institute for Legal Reform (ILR), which analyzed nuclear verdicts from 2013 through 2022, economic damages constituted only about 10% of the total damages awarded in these cases. While some verdicts lacked a complete breakdown of damage categories, available data indicated that non-economic damages—such as pain and suffering—formed the majority of the verdict amounts. In essence, subjective assessments by jurors played a significant role in determining the verdict amount. Another interesting fact from the 2024 ILR study is that only about one-quarter of nuclear verdicts included punitive damages; although, when they were awarded, the amounts were extraordinary.
4. Third-Party Litigation Funding: The increase in third-party litigation funding (TPLF) for lawsuits fuels the pursuit of large verdicts. TPLF allows plaintiff lawyers – and their clients - to pursue cases without bearing the full financial burden. Funders receive a share of any damages award or settlement if the lawsuit is successful.
5. Evolving Legal Strategies: Plaintiff attorneys are continually refining their strategies to maximize jury awards. This includes leveraging emotional appeals, presenting compelling narratives, and employing expert witnesses to quantify damages and underscore the severity of the insurer's misconduct. They also employ tactics like the “reptile theory”, emphasizing safety and fear to sway jurors.

Conclusion

The proliferation of nuclear verdicts in insurance bad faith cases underscores the complex interplay between legal, societal, and economic factors shaping jury decisions. As these trends continue to evolve, insurers, policyholders, and legal professionals must remain vigilant and proactive in navigating the shifting landscape of insurance litigation. By understanding the root causes of nuclear verdicts and implementing strategic measures to address them, stakeholders can mitigate risks, uphold ethical standards, and promote fair and equitable resolutions to disputes.

‍