What happened: The U.S. saw a record 27 nuclear verdicts exceeding $100 million in 2023, driven by rising litigation costs and social inflation, which hit a 20-year high at 7%.

How it works: Social inflation refers to the rising cost of liability claims beyond what can be accounted for by economic factors, leading to increased insurance premiums and reduced coverage.

• As social inflation drives up the cost of claims, companies are seeing their insurance costs skyrocket, especially in sectors like trucking, where excess coverage rates have increased by over 75%.
• This trend is leading insurers to leave the market or avoid insuring certain industries altogether, leaving companies exposed to higher risks if they can’t secure adequate coverage to operate.

TLR Thoughts: The rise in nuclear verdicts—fueled by inflated medical bills and social inflation—poses a serious threat to every company trying to operate in the Lone Star State. Without legislative action, more and more employers will face tough choices about their ability to continue to do business in Texas.

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