Verdicts on trial: The behavioral science behind America’s skyrocketing legal payouts

Liability claims costs in the United States have entered a self-reinforcing spiral. Traditional economic drivers such as wage inflation, medical-cost trends and CPI growth no longer explain the pace at which liability claims are escalating. This growing gap between economic fundamentals and actual claims experience has been termed social inflation, which is in large part driven by legal system abuse.

While much has been written about the behavioral causes of legal system abuse — plaintiff lawyer tactics, evolving jury attitudes or expanding theories of liability — these narratives have largely remained anecdotal. They are widely accepted, often repeated, but seldom quantified. Swiss Re’s 2025 Behavioral Social Inflation Study quantifies what the industry has long suspected. Drawing on a nationally representative survey of 1,150 U.S. adults presented with a series of randomized legal simulations, the study offers a rigorous assessment of the behavioral forces driving today’s litigation outcomes.

The findings confirm that juror sentiment has shifted decisively toward plaintiffs, and this shift is influencing verdicts in measurable ways. Crucially, the effect is not confined to Fortune 500 companies. In cases involving severe injury, jurors are nearly as likely to recommend high compensation against small and medium-sized enterprises (SMEs) as they are against large corporations.

By examining legal system abuse through a behavioral lens, this article delivers insights and actionable ideas to insurers, reinsurers and defense counsel to help mitigate these growing pressures.

At the heart of legal system abuse lies a fundamental shift in public sentiment. Litigation is no longer viewed by the average American as a last resort or an excessive burden on society. According to our 2025 behavioral study, just 56% of respondents believe there are too many lawsuits in the U.S. — a sharp decline from 90% in 2016. This signals a major shift in perception, with lawsuits increasingly seen as a legitimate tool for exacting justice.

Support for larger awards has followed suit; 76% of respondents indicated that damages awarded in lawsuits are either too low or just right, up from 58% in 2016. This shift alters the psychological starting point in the courtroom: jurors may enter deliberations assuming that current compensation levels are inadequate. Higher awards become not just permissible but expected.

Attitudes toward corporate defendants are also trending more and more to the extreme. When asked whether large corporations (LCRs) prioritize profit over safety, 85% of respondents agreed. In contrast, only half said the same about small and medium-sized enterprises (SMEs). Support for punitive damages remains strong, with 79% agreeing they are the best way to deter misconduct by large corporations. Notably, 67% support punitive damages against SMEs as well, which is a narrower margin than many risk managers might expect and a sign that smaller firms are not immune to growing skepticism.

These trends in attitude form the psychological foundation of jury pools nationwide. The shift is not merely ideological but also behavioral. Respondents were more likely to recommend compensation even in ambiguous scenarios. For example, 42% said a large corporation should pay medical expenses even if it was not directly at fault, compared to 29% for SMEs. This suggests a default assumption of corporate responsibility — a mindset jurors may carry with them into the courtroom.

To understand how attitudes toward litigation translate into actual monetary outcomes, we asked survey participants to weigh in on a series of real-world scenarios. These covered slip-and-fall incidents, motor vehicle accidents and product liability cases — all designed with some ambiguity around who was at fault. We had three variable factors: 1) the size of the company involved (large corporate vs. SME), 2) the severity of the injury, and 3) whether the case included a plaintiff demand or defense counteroffer.

A clear pattern emerged: injury severity — not company size — is the strongest driver of verdict behavior. When the injury was serious — such as a broken hip or spinal damage — participants were much more likely to assign blame and recommend high compensation, regardless of whether the defendant was a global brand or a local business. In one product liability scenario, where the injury resulted from user error, 40% of respondents still believed compensation was warranted for a severe injury, compared to only 24% for a minor one.

Large corporates drew slightly more blame and larger awards, but in most cases the differences were modest and not statistically significant. This challenges a long-held assumption in underwriting: that SMEs are inherently at a lower risk when it comes to severe bodily injury claims. Our findings suggest that when the injury is serious, jurors treat SMEs and LCRs more similarly than might be expected.

One surprise came in the slip-and-fall scenario. When the plaintiff didn’t introduce a monetary anchor, award expectations were relatively modest, often below $1 million — and there was no meaningful difference between SMEs and LCRs. But once a plaintiff anchor was introduced — essentially a suggested award — the entire picture changed.

Higher plaintiff demands skewed the award distribution upward, increasing both average payouts and the chance of nuclear verdicts. For LCRs, a $100 million anchor raised the average award to $20 million, a significant increase from $3 million when the anchor was $5 million. The increase was similarly dramatic for SMEs: from $2.4 million to $13.8 million. In each case, higher anchors inflated expectations, even when company size remained the same.

While the overall distributions for SMEs and LCRs were similar, the award amounts diverged. At $5 million and $50 million anchors, average awards for LCRs were about 25% higher than for SMEs. That gap widened to 44% at the $100 million anchor. Large corporates also showed a heavier tail — meaning a higher number of large awards — about 20% greater than SMEs. Still, the share of respondents issuing a nuclear verdict (awards over $10 million) was similar: 30% for LCRs vs. 25% for SMEs.

To test potential mitigation strategies, we also introduced defense counter-anchors into the scenarios. In one product liability case we paired a $20 million plaintiff demand with a $3 million defense counteroffer. The result: the average award dropped to $3.8 million, much closer to the defense figure. That is a 40–50% reduction compared to what we would expect without a counter-anchor.

Still, an anchoring strategy is not a silver bullet. About 14% of respondents still issued a nuclear verdict, awarding over $10 million. So, while counter-anchoring clearly helps temper expectations and compress the range of outcomes, it does not eliminate the risk of extreme verdicts, especially in cases where emotions run high.
 

Our study also explored the extent to which various demographic groups support litigation. The results reveal a strong political, generational and economic skew — each of which meaningfully shapes perceptions of fairness, compensation and liability.

Political affiliation was a key differentiator. Self-identified Democratic respondents selected award amounts that were 25% to 65% higher than those proposed by Republicans, with the gap widening at higher plaintiff anchors. Independents tended to fall between the two groups in terms of award size. However, on broader attitudes such as support for litigation and the use of punitive damages, Independents aligned more closely with Republicans, showing less enthusiasm than Democrats for aggressive legal action or large punitive awards.

Age was another clear differentiator. Younger respondents — especially those under 40 — expressed significantly more plaintiff-friendly views than older generations. For example, 83% of under-40s felt that current damages are too low or just right, compared to just 41% of those over 60. As younger cohorts start to make up a larger share of jury pools, this generational divide may contribute to a sustained increase in large awards and nuclear verdicts.

Income levels also correlated with greater support for litigation. Lower-income respondents favored broader corporate accountability and were more likely to support legal action. This group may view the legal system as a form of redistributive justice, further reinforcing the trend toward higher awards.

These findings illustrate the importance for defense teams to understand jury pool composition when preparing for trial and when evaluating the tradeoffs between proceeding to court and settling. In venues with younger, left-leaning or economically stressed populations — often in urban centers — the probability of nuclear verdicts rises significantly.

The implications of our findings are both far-reaching and urgent, affecting nearly every stakeholder in the insurance ecosystem.

The case for tort reform is clear. Our research shows how public attitudes shaped by a desire to hold companies accountable and a receptiveness to high compensation demands create fertile ground for the plaintiff’s bar, often backed by third-party litigation funders. Targeted tort reforms have historically helped restore balance to the system. We are now seeing early momentum in states like Florida, Georgia and Louisiana, where legislatures have introduced reforms to cap damages, limit attorney fees and create transparency in litigation funding. But broader, coordinated efforts are needed to mitigate systemic costs and preserve insurance affordability for consumers and businesses alike.

Raising public awareness of litigation trends has never been more important. As claims severity and frequency rise, insurers are forced to raise premiums, reduce coverage or withdraw from certain markets entirely. The result is more expensive, less accessible liability insurance. Most policyholders may not realize it, but their premiums reflect not just their own risk profile but also the emotional and psychological biases of jurors across the country. This underscores the need for the insurance industry to better explain to the public how litigation dynamics ultimately impact the availability and affordability of coverage.

For insurers and reinsurers, our study reinforces the scale and persistence of uncertainty in the U.S. liability market. The data offer little hope for near-term relief: Legal system abuse shows no signs of abating, and pricing uncertainty remains extraordinarily high. Maintaining underwriting discipline through prudent limit structures, appropriate attachment points and rate increases that reflect the underlying loss cost trend — is essential to sustaining profitability.

For defense counsel, the research validates the strategic importance of early counter-anchoring. Jurors are responsive to reasonable, fact-based suggestions, especially when presented to them before plaintiff narratives take hold. Equipping trial teams with empirically grounded anchor points could reduce loss severity by millions in high-stakes cases. Counter-anchoring won’t eliminate nuclear verdict risk, but it can compress the range of outcomes and steer expectations toward more moderate territory.

For regional carriers and SMEs, probably the most sobering insight is that no one is insulated. When injuries are severe, SMEs are just as vulnerable to nuclear verdicts as large corporations — and in some cases more so, due to thinner capital buffers and lower policy limits. A single runaway verdict can be crippling. Many regional carriers may lack the claims volume or internal data to observe these patterns firsthand, making it harder to adjust to the behavioral realities shaping today’s litigation outcomes. We are here to support our partners with data-driven insights and thought leadership to help navigate this evolving risk landscape.

The path forward requires a shift in mindset across the insurance value chain. Our findings show legal system abuse isn't just a legal or economic issue — it reflects deeper shifts in juror sentiment and societal expectations. Traditional rate adjustments and claims strategies aren’t enough. Disciplined underwriting, management of limits and pricing strategies must be rigorously pursued.

Importantly, this is not an argument to deny compensation to those who are genuinely injured or wronged. Fair compensation is, and must remain, a cornerstone of an equitable legal system. However, fairness should apply to all parties. What we are seeking is balance; outcomes that are reasoned, proportionate, and sustainable for claimants, insurers, and the communities that rely on them.

Finally, restoring balance will require ongoing engagement with policymakers, the legal community and the public. Without broader tort reform and transparency around litigation practices, legal system abuse will continue to strain insurance availability, affordability and public trust. The time to act is now.