US companies faced more than $40 billion in damages from lawsuits last year, with the average jury award against corporate defendants skyrocketing to a record $65.7 million, up from $41.7 million in 2023, according to data from LexisNexis. As reported by the Financial Times, this surge in litigation—often referred to as “nuclear verdicts”—has prompted insurers to retreat from corporate liability coverage, fearing unsustainable losses. Major legal battles involving tech giants like Microsoft, Amazon, and Micron have fueled this trend, intensifying concerns within the insurance industry and corporate boardrooms.
While consumer class actions continue to attract public attention, the sharp rise in jury awards has been largely driven by high-stakes disputes between corporations, particularly in intellectual property cases. In 2023, courts awarded a record $665 million for trade secret violations and $3.8 billion for patent infringement. In one notable case, Microsoft was ordered to pay $242 million to IPA Technologies over voice-recognition software patents, while Amazon was hit with a $122 million verdict for infringing advertising technology patents owned by AlmondNet. Walmart, too, faced a $101 million penalty for breaching a contract with a textile supplier during the early months of the COVID-19 pandemic.
The escalating legal payouts have alarmed insurers, leading some to withdraw from the US corporate liability market altogether. Swiss Re, one of the world’s largest reinsurers, set aside over $3 billion to cover US liability claims in 2024 but has since signaled a pullback, citing an unpredictable litigation landscape. The reinsurer attributed the trend to growing “anti-corporate sentiments” and warned that there is “no end in sight.” Munich Re, another major player in the industry, has also reduced its exposure to long-term US business liability, fearing that the rising cost of litigation could mirror past crises, such as the wave of asbestos and environmental claims that nearly collapsed the Lloyd’s of London insurance market in the 1990s.
The rise of “nuclear verdicts” has sparked a broader debate over the forces driving these staggering jury awards. Business trade groups, including the US Chamber of Commerce, have pointed to litigation funders—investment firms that bankroll lawsuits in exchange for a share of the winnings—as a key factor in the explosion of corporate lawsuits. However, litigation funders argue that while they help plaintiffs bring cases against large corporations, they do not influence verdict sizes. Others suggest that the surge in large jury awards is a byproduct of political gridlock, with courts effectively taking on the role of legislating corporate accountability in areas such as consumer protection and healthcare.
As legal costs mount, insurers and corporations are reassessing their exposure to US liability risks. Warren Buffett, whose company Berkshire Hathaway owns several major insurers, acknowledged the issue in a recent shareholder letter, stating that insurers must work to combat “runaway verdicts” and excessive litigation. Meanwhile, companies like Bayer, which faces multibillion-dollar lawsuits over its Roundup weedkiller, continue to appeal massive verdicts while remaining tight-lipped about whether insurance will cover their legal losses.
With billion-dollar lawsuits becoming more common, corporations and insurers alike face an increasingly volatile legal landscape. As insurers retreat and businesses brace for rising legal risks, the financial and strategic consequences of America’s growing “nuclear verdict” phenomenon are likely to shape corporate decision-making for years to come.
