The Hidden Forces Reshaping Casualty Risk

The casualty insurance market has always lived with uncertainty, but the forces shaping risk today are on an entirely different scale. Nuclear verdicts have grown larger and more frequent. Litigation funding, once a niche practice, has become a multibillion-dollar engine powering plaintiff staying power. And jurisdictional differences, long acknowledged but rarely quantified, now dictate outcomes just as much as industry class or operational behavior.

The result is a liability environment unlike anything the industry has seen before — one that is not cyclical but structural, and one that will define underwriting strategy for years to come.

What stands out is that none of these pressures are fading. In fact, many are accelerating. For the first time, carriers, brokers, reinsurers and insureds alike recognize that volatility is not a temporary headwind but a permanent feature of the landscape.

Nuclear Verdicts Intensify

For more than a decade, underwriters have watched as jury awards crept upward, then surged and finally exploded into what are now routinely called "nuclear verdicts." In 2024 alone, 135 lawsuits against a corporate defendant resulted in a nuclear verdict, the highest number recorded to date.¹ That figure represents a 52% increase over 2023, as total verdicts in 2024 reached $31.3 billion, an increase of 116% over the previous year.

"A million dollars doesn't mean the same thing it used to" says Ania Caruso, national casualty president at RPS. "For juries today, it's just a number."

Carriers have stopped being surprised by this severity. Instead, they have adjusted their models, raised their expectations and pricing baselines, and compressed limits, especially in the lower layers where these shock losses tend to concentrate.

Litigation Funding Becoming More Common

If nuclear verdicts represent the public face of the new liability environment, then litigation funding is its invisible engine. Once limited to specialty law firms and a handful of private investors, third-party litigation financing has grown into a massive capital flow into the court system.

Total investments in litigation funding are projected to reach $18.9 billion in 2025 and exceed $67 billion annually by 2037.¹

This infusion of capital has fundamentally shifted the balance of power in litigation. Plaintiffs who once might have settled early due to financial strain can now stay in the fight indefinitely. Cases last longer. Demands rise. Trials become high-stakes events because outside investors expect substantial returns. Claims that once seemed manageable can now spiral into multi-year legal marathons.

From an underwriting perspective, this means that severity is not only higher but more durable. The traditional pressure points of legal costs, time and uncertainty no longer work the way they used to. Litigation funding has reshaped incentives throughout the system and carriers are rethinking everything from case reserving to pricing attachments because of it.

Jurisdiction as Destiny

Perhaps the most consequential shift for carriers is the increasing recognition that geography often matters more than class of business.

Simply put, geography can determine outcomes as much as industry or behavior, since the litigation environment in Illinois and Texas differs significantly from that in California or New York. These jurisdictional divides are shaping everything from pricing to policy structure.

This means that a well-run operation in a plaintiff-friendly venue may carry more inherent risk than a moderately run one in a jurisdiction with a more balanced legal environment. Venue volatility is now central to pricing, structuring and underwriting strategy. Attachments rise sharply in certain states. Carriers restrict their participation in others. And in some cases, the jurisdiction alone determines whether a risk is even quotable.

As a result of these forces, the reality of today's casualty environment is that best-in-class operations can still face catastrophic losses.

It's frustrating for clients, says Michael Schafer, area senior vice president and casualty broker at RPS. "You can do all the right things — training, inspections, documentation — and still get hit hard. That's the most frustrating thing for clients. They do everything correctly and they're still sitting on a $50 million loss."

Losses today don't always correlate with operational behavior. They correlate with the legal environment surrounding the claim, the narrative that lands in the jury box and the financial backing available to plaintiffs.

Learn more about what's next for the Casualty insurance market in the 2026 Casualty Market Outlook.

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