How legal system abuse pushes insurance costs higher: Swiss Re

Legal system abuse and social inflation have driven significant increases in claims costs and liability losses in the U.S. insurance industry, according to Monica Ningen, CEO of U.S. P&C reinsurance at Swiss Re.

Ningen shared her insights with Digital Insurance into how this shifting liability environment is driving claims severity as both insurers and policyholders feel the impacts of rising legal system abuse.

These trends are evident in Swiss Re's 2025 Behavioral Social Inflation Study, which found that the general public appears to be getting numb to the saturation of the court system: only 56% of respondents said there are too many lawsuits in the U.S., a significant decline from 90% reported in 2016. Support for larger damage awards has also grown, with 76% of respondents indicating awards are either too low or about right, compared to 58% in 2016.

How is the liability environment directly impacting insurers?

The U.S. liability environment is becoming more volatile and more costly in ways that are not always visible to the broader public. Court awards are increasing in size and unpredictability, which makes it harder for insurers and reinsurers to assess risk and set prices with confidence. Insurance is built on the ability to forecast loss trends over time. When legal outcomes become less predictable, that foundation is weakened.

This directly affects insurers because higher and more uncertain claims require more capital, tighter underwriting and more caution in deploying capacity. Over time, those pressures flow through to end consumers. Businesses may face higher premiums or reduced coverage. Individuals ultimately bear the cost through higher prices for goods and services, or through insurance that is more expensive and harder to obtain. A stable and transparent legal framework is essential to keeping coverage affordable and widely available.

Is the value of litigation increasing?

There is significant evidence that the value of litigation is increasing across verdicts, settlements and overall claims severity.

Data from Westlaw shows that the share of large general liability verdicts has increased dramatically since 2014. Research from Marathon Strategies similarly demonstrates a clear uptick in so‑called "nuclear verdicts." In 2023 alone, there were 27 lawsuits against defendant companies that resulted in awards of more than $100 million each, a one‑third increase over 2022.

These headline verdicts do not exist in isolation. They directly influence settlement behavior. Fewer than 2% of cases are ultimately decided in court, according to a 2023 report from Sedgewick; the vast majority settle before reaching a verdict. However, when juries award increasingly large sums, those awards reset expectations and drive higher settlement values across the system.

Loss data reflects this dynamic. Swiss Re shares that U.S. commercial liability losses reached $143 billion in 2023, exceeding global insured natural catastrophe losses in the same year. That comparison underscores the scale of what is happening within the liability system.

Our behavioral survey research further indicates growing approval of large verdicts and increasingly plaintiff‑friendly jury attitudes. In that environment, litigation severity continues to trend upward.

How do higher litigation costs affect the end consumer?

The U.S. liability environment reflects rising severity, growing complexity and structural shifts including expanded attorney involvement and litigation funding that are contributing to higher costs across the system. While insurers feel this through higher claims payouts and greater volatility, the ultimate impact extends well beyond insurance balance sheets. 

Higher litigation costs translate into higher premiums for businesses and families, reduced availability of coverage in certain markets and stricter underwriting standards. For small businesses, that can mean higher operating costs or difficulty securing adequate liability protection. For consumers, it can mean paying more for everyday goods and services as companies pass through rising insurance expenses.

In some cases, it can also limit access to coverage options in higher-risk areas or sectors. A legal environment that consistently produces escalating severity without greater transparency or accountability risks making insurance less affordable and less accessible, ultimately affecting the economic resilience of communities.