Munich Re and APCIA survey shows majority want regulations on litigation as nuclear verdicts rise

By Isha Marathe

Feb 4 - (The Insurer) - Sixty-eight percent of Americans believe that nuclear verdicts will increase the overall cost of home, auto and business insurance while 69 percent believe that third-party litigation funding and jury anchoring will also drive up costs, according to a survey conducted by Munich Re US and the American Property Casualty Insurance Association (APCIA).

The online survey, conducted by The Harris Poll on behalf of APCIA and Munich Re from 26 to 30 September 2024, canvassed 2,090 adults aged 18 and up on consumer attitudes about certain plaintiff lawyer tactics.

The report said that litigation reforms are needed to reduce costs and improve the availability and affordability of insurance for all.

"This unchecked surge of litigation has had a far-reaching economic impact, costing the US economy an estimated $529bn and each household over $4,200," said Stef Zielezienski, executive vice president and chief legal officer at industry trade body APCIA.

The online survey revealed that 75 percent of respondents were not familiar with the term "jury anchoring" and 70 percent were not familiar with third-party litigation funding, but once made aware 69 percent said they believe these practices will increase the overall cost of coverage, and two-thirds agreed that they will also increase the cost of everyday items including consumer goods.

A majority of the respondents said that lawyer tactics are misleading juries and should be regulated.

For instance, 67 percent of respondents said that state and federal lawmakers should put restrictions on lawyer advertising to ensure that they’re not misleading to help reduce the number of lawsuits filed, and 68 percent agreed that advertising of verdicts with purported large payouts desensitises people to high jury awards.

Seventy-seven percent of respondents agreed that foreign investors being third-party investors in civil claims and litigation could present a threat to national security and 78 percent said the practice should be forbidden.

Additionally, 84 percent said that plaintiff lawyers should support their suggested damage awards with factual evidence. And 75 percent said the practice of jury anchoring – a strategy whereby plaintiffs' attorneys ask for numbers beyond what the jury will offer with an expectation to up the net award – will increase the size of the jury award.

“As an industry, it is important to raise awareness and provide education on how these legal practices impact not only the insurance industry, but ultimately the end consumer," said Bonnie Guth, head of government affairs at Munich Re America Services.

"Allowing this abuse of the legal system to remain unchecked, it will likely persist and send improper signals to jurors, judges, and defendants about the value of damages. In turn, this can lead to higher insurance costs, financial strain on insurers and reinsurers, depletion of municipal resources, and disincentives for businesses to take risks."