VCA Software

The Claims Management Role in Nuclear Verdicts

When a jury is outraged and awards damages of $10 million or more, with the intent of delivering social justice, it is known as a nuclear verdict. This is a growing trend that is raising insurance costs and decreasing underwriting capacity in certain industries.

For some, the rendering of social justice has become a business. Verisk shares some common terms associated with nuclear verdicts:

  • Litigation funding: A third-party investor provides funding for the litigation costs of the plaintiff in exchange for a part of the pay-out.
  • Reptile strategy: A tactic used by attorneys to appeal to the “lizard brain” which triggers the fight or flight response in humans. This tactic is used to incite jurors.

Key Impacts

Trucking is one industry hit particularly hard by nuclear verdicts. The American Transportation Research Institute documented that the number of pay-outs of more than $1 million exponentially increased between 2006 and 2019. In addition, the report found that between 2010 and 2018, award values increased by 51.7% annually. During the same period, standard inflation grew 1.7 percent and healthcare costs grew 2.9 percent.

Commercial auto coverage lines have been particularly impacted and carriers are more cautious about underwriting fleets than ever before. As a result, coverage has become increasingly expensive, causing some fleets to be underinsured and less protected against large-scale losses.

The Claims Management Role

What can file handlers do to set the stage for an amenable claims journey that does not escalate into a nuclear verdict?

According to Verisk, the best way to avoid a nuclear verdict is to avoid a trial. As the first point of contact for a new claim, file handlers play a critical role in the process.

It’s important that file handlers consider the humans involved and what they’re going through. They must empathize with claimants and ensure that they feel heard, understood and cared for. They also must be seen as a neutral, objective and responsive party.

If a file handler notices that a case could be headed for litigation, it’s important to proactively notify all parties early so a strategy can be developed. Strong collaboration between the claims and legal teams can be crucial to success.

In some cases, a quick settlement can effectively satisfy the plaintiff and preserve the defendant’s reputation, while avoiding the high cost of litigation and the possibility of a nuclear verdict.

The Right Tech Humanizes the Claim Journey

When file handlers don’t have to waste time on mundane tasks, they have more time to focus on the human aspects of claims management. VCA Software improves the speed, transparency and communication throughout the claim journey, increasing claimant satisfaction and reducing the chance of a trial.

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