Swiss Re Explores Social Inflation and Rising Liability Jury Verdicts

Swiss Re's article "Verdicts on Trial: The Behavioral Science Behind America's Skyrocketing Legal Payouts" explores the hidden behavioral forces contributing to escalating liability awards in the United States. Written by Andrea Scascighini, head of casualty portfolio analytics and steering, the article draws on Swiss Re's 2025 Behavioral Social Inflation Study to analyze jury attitudes and their impact on litigation outcomes. 

According to Swiss Re, traditional economic indicators such as wage inflation, medical-cost trends, and Consumer Price Index growth no longer adequately explain rising liability claims costs. Instead, the industry is facing a phenomenon of social inflation, driven by shifts in juror sentiment and patterns of legal system abuse. Mr. Scascighini emphasized that this shift is influencing both large corporations and small and medium-sized enterprises (SMEs), undermining assumptions that smaller firms are inherently less exposed to extreme verdicts. 

Per the article, litigation has become increasingly normalized in American society. The share of respondents who believe there are too many lawsuits declined sharply, from 90 percent in 2016 to 56 percent in 2025. At the same time, support for larger awards has grown: More than three-quarters of respondents viewed damages as too low or appropriate, compared to just over half in 2016. These attitudinal changes alter the psychological baseline for jurors, who may enter trials with a predisposition toward higher compensation. 

Swiss Re said that injury severity was the most significant determinant of jury behavior in simulated scenarios, outweighing company size. Whether a case involved a multinational corporation or a local business, serious injuries such as spinal damage or amputations consistently triggered higher awards. Anchoring also proved influential: When plaintiffs suggested large awards, the average payouts rose dramatically, while defense counter-anchors helped to moderate juror expectations, though they did not eliminate the risk of nuclear verdicts. 

According to the article, demographic differences also played a critical role. Younger jurors, lower-income respondents, and those identifying as Democrats favored higher awards, while older jurors and Republicans were more restrained. Independents fell in between but leaned toward more conservative compensation views. These distinctions highlight the importance of understanding the composition of jury pools when evaluating trial strategies and settlement options. 

Mr. Scascighini explained that these behavioral trends carry significant implications for insurers, reinsurers, and policyholders. The rise in claims severity forces insurers to respond with higher premiums, reduced coverage, or even market withdrawal. SMEs, despite their smaller scale, face similar risks of nuclear verdicts and may be disproportionately impacted due to lower capital buffers and limited policy limits. For the insurance industry, disciplined underwriting, prudent limit structures, and careful pricing strategies are essential to managing these challenges. 

Per the article, systemic solutions such as tort reform and greater transparency in litigation funding will be necessary to restore balance. Efforts underway in states like Florida, Georgia, and Louisiana represent early steps toward limiting excessive awards and attorney fees, but broader reforms are needed. Raising public awareness about how litigation trends affect insurance affordability is also critical, as policyholders ultimately bear the cost of escalating verdicts through higher premiums and limited availability of coverage. 

According to Swiss Re, counter-anchoring strategies and data-driven defense approaches can help mitigate risks, but they cannot fully eliminate exposure to large verdicts. The article concludes that restoring balance will require coordinated engagement among insurers, defense counsel, policymakers, and the public. Fair compensation must remain central, but outcomes must also be sustainable and proportionate across all parties in order to preserve trust and stability in the liability system.