Big, nasty claims in the casualty sector: no end in sight

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On September 19 Advisen hosted its second annual Big, Nasty Claims Conference at the New York Law School. The discussion focused on the issues that are driving mass torts and class actions that have the potential to exceed $100 million.

In her opening remarks, Ellen Greiper, partner with Lewis Brisbois, said that seven to nine figure verdicts are becoming common, a statement echoed by many of the panelists. And in his keynote address, Sherman “Tiger” Joyce, president of the American Tort Reform Association cited the trend of courts becoming a vehicle for public change that started with the tobacco litigation in the 1990s and continues through today’s opioids liability litigation. He also noted that the sheer “critical mass” of claimants is driving astronomical verdicts, for example the Xarelto® blood thinner lawsuit had 25,000 claimants and resulted in a $775 million verdict.

He mentioned speaking with an insurer who was ready to settle an older, expired claim for $150,000. Then legislation came through, changing the statute of limitations – and the claim demand changed to $50 million. “It’s not going to stop here. It’s never a one-off when it comes to this type of activity. Toxic torts, there are any number of events this will migrate to. Be on the alert for the exposure,” he warned the audience. “It’s gotten to the point where it’s just exploding.”

Joyce also cited liberal expert evidence rules, and the bending of personal jurisdiction rules, especially in so-called judicial hellholes, leading the way to more and bigger casualty losses.

Jim Blinn, executive vice president, Client Solutions, Advisen and Jesse Paulson, managing director, U.S. Excess Casualty Leader, Marsh, led the session dealing with frequency and severity trends for losses larger than $100 million, including a growing number of verdicts that breach the $1 billion threshold. The audience got a glimpse into Advisen’s proprietary excess casualty loss database via a slide listing recent colossal verdicts. Topping the list were Monsanto’s Roundup, Johnson & Johnson’s Pinnacle hip replacements and opioids and PG&E’s Camp Fire related losses.

In a session dealing with the insurance industry’s response to large claims Kathy Reid, senior vice president of Berkshire Hathaway Specialty Insurance said that the more information the insurer has about a client the better — uncertainty causes price to increase. She said that while this is not the best time for insurers to come into the market some middle market casualty business can still be profitable.

So what types of Big Nasty Claims keep insurance executives up at night? Paul DeGiulio, senior vice president of General Casualty and Health Care Claims, Allied World, cited incidents causing multiple claims such as train wrecks or industrial explosions. Aging infrastructure and commercial auto (with rising fatalities on the road) are also areas of concern. And in premises liability, more businesses are being held liable when customers fall victim to crime in parking lots and garages.