Consulting firm Sedgwick released a report on May 31 titled "Liability Litigation," which found that a technique called "anchoring" used by trial attorneys results in larger settlements and verdicts. Large jury verdicts are a contributing factor to social inflation, meaning insurance costs increase faster than general inflation.
According to the report, anchoring is a technique used by plaintiff attorneys in which they suggest a large verdict amount that serves as an "anchor" in jurors’ minds as a reference point for determining damages. This technique is being "employed successfully by the plaintiffs’ bar" to secure nuclear and thermonuclear verdicts, or verdicts larger than $10 million and $100 million, respectively. Sedgwick’s research found that the plaintiff’s bar will likely continue employing this tactic, while the defense has struggled to counter it.
California ranked third in the country for the largest total sum of nuclear verdicts in 2023, with 117 verdicts totaling $25.23 billion, according to a report from Marathon Strategies. Marathon cited California’s "liability-friendly laws and courts" as one reason the state has seen so many nuclear verdicts. One major nuclear verdict in the state in 2023 stemmed from a lawsuit over a vehicle accident, which resulted in a $161 million verdict against Suzuki Motor in Orange County.
Nuclear verdicts have had a significant impact on the insurance industry, leading to several negative consequences, according to a report from the Insurance Journal. One major impact is the strain on the availability and affordability of insurance coverage. As the size of jury awards increases, especially in cases involving trucking, pharmaceuticals, and product liability, insurers find it more challenging to underwrite these risks without raising premiums or reducing coverage limits.
In California, according to Bankrate's report, the average cost of full coverage car insurance is $2,633 every year compared to the national average cost of $2,299. Los Angeles drivers pay an average of $3,600 annually for car insurance.
Sedgwick uses proprietary technology and industry data to provide insights and business solutions, according to the firm’s website.