Swiss Re: Legal system abuse drives costs for insurers

Swiss Re's report, "2025 Behavioral Social Inflation Study," assessed the behavioral forces that drive litigation outcomes to better understand rising liability claims costs in the United States. The survey, which presents randomized legal simulations to 1,150 U.S. adults, found that juror sentiment has shifted largely toward plaintiffs. The report reveals that businesses of any size could be impacted, as jurors are nearly as likely to recommend high compensation against small and medium-sized enterprises (SMEs) as they are against larger corporations.

Monica Ningen, CEO U.S. property and casualty reinsurance at Swiss Re, says, "We're seeing growing strain on the civil justice system, with more lawsuits yielding damages that often outpace the actual harm. Jury awards in the tens of millions are becoming more frequent, shaped by emotion, not just evidence. This trend isn't limited to large corporations. Small and mid-sized businesses face similar outcomes when serious injuries are involved."

Swiss Re's behavioral study finds that 56% of respondents believe there are too many lawsuits in the U.S. versus 90% of respondents in 2016, and support for large awards has grown with 76% of respondents saying that damages awarded in lawsuits are "either too low or just right." This is up from 58% of respondents in 2016 responses.

In assessing the responses, Swiss Re identified that injury severity, not company size, is the greatest driving factor in verdict behavior. Respondents were much more likely to recommend high compensation for serious injury, regardless of whether the defendant was a large or small corporation, according to the survey. For example, in one of the scenarios presented to participants where the severe injury was a result of user error, 40% said that compensation was warranted versus 24% for a minor injury. 

While respondents blamed large businesses, and called for larger awards, slightly more than for SMEs, Swiss Re says that the differences were minimal and not statistically significant. According to Swiss Re, this challenges the long-held belief that SMEs are inherently at a lower risk in severe bodily injury claims.

"These rising liability costs don't stay in the courtroom. They contribute to higher insurance premiums, reduced coverage availability and increased costs for everyday goods and services. The growing role of third-party litigation funding adds another layer of pressure, often prolonging cases and inflating awards," says Ningen. "Given the magnitude of these costs, businesses must pass these pressures along the value chain, and ultimately, consumers bear the impact. As insurers, we're maintaining underwriting discipline, but real progress will take broader reforms. Greater transparency, balanced damage caps and more consistent trial practices can help restore fairness and predictability to the system."