You ever go through your insurance renewal process thinking 'what am I getting out of this? My rates keep going up and up but I don't have any claims!'
Yea, we see and discuss that almost daily - and guess what, we don't always like it either. However, understanding the societal impacts and what it means to insurance companies, but more importantly you as a consumer is vitally important. So, what do nuclear verdicts and Third Party Litigation Funding mean to you?
Probably nothing now, but it will mean something if we continue in the current trajectory in the insurance environment. Keep reading for the impact of nuclear verdicts, rate impacts and Third Party Litigation Funding and what this might mean for you in 2024... 💼📈
As we enter 2024, the insurance landscape grapples with the challenge of nuclear verdicts – those staggering settlements awarded by juries in liability cases. These verdicts, often surpassing $10 million, present significant hurdles for insurers across sectors.
The insurance industry is experiencing a ripple effect from nuclear verdicts, prompting insurers to adjust rates to accommodate the heightened
risk exposure. In addition to this challenge, the emergence of third-party litigation funding further complicates the situation.
Third-party litigation funding involves external investors providing financial support to plaintiffs in exchange for a portion of the settlement or award. This practice has gained traction in recent years, fueling an increase in litigation frequency and size of claims.
In 2024, insurers are anticipated to continue facing pressure to reassess their risk assessment models and pricing strategies due to the combined impact of nuclear verdicts and third-party litigation funding. These factors contribute to the upward trend in insurance rates across various lines of coverage.
To navigate this evolving landscape, insurers are prioritizing proactive risk management. This includes strengthening underwriting discipline, enhancing claims management processes, and implementing robust risk mitigation measures.
As we move forward, collaboration between insurers, policyholders, and industry stakeholders becomes increasingly vital. By fostering open dialogue and proactive risk mitigation strategies, we can effectively manage the challenges posed by nuclear verdicts and third-party litigation funding, ensuring a resilient insurance ecosystem that delivers value to all stakeholders.
Come learn more with Risk Strategies Company in our State of the Market!
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