U.S. companies paid out more than $40 billion in lawsuit damages last year as jury awards against corporate defendants soared to record levels. The average jury verdict rose to $65.7 million, up sharply from $41.7 million in 2023, according to data from LexisNexis.
The Financial Times reports that this trend—often referred to as “nuclear verdicts”—has made insurers wary of offering corporate liability coverage due to the risk of unsustainable losses. High-profile lawsuits involving major tech companies such as Microsoft, Amazon, and Micron have contributed to this surge, raising concerns among both insurers and corporate executives.
While consumer class-action lawsuits often grab headlines, the sharp increase in jury awards has largely been fueled by corporate disputes, particularly in intellectual property cases. In 2023, courts awarded:
$665 million for trade secret violations
$3.8 billion for patent infringement
Among the most notable cases, Microsoft was ordered to pay $242 million to IPA Technologies for infringing on voice-recognition software patents. Amazon was hit with a $122 million verdict for violating advertising technology patents owned by AlmondNet. Meanwhile, Walmart faced a $101 million penalty for breaching a contract with a textile supplier during the early months of the COVID-19 pandemic.
The rapid rise in legal payouts has alarmed insurers, leading some to withdraw from the U.S. corporate liability market. Swiss Re, one of the world’s largest reinsurers, set aside over $3 billion for U.S. liability claims in 2024 but has since scaled back its exposure. The company cited an increasingly unpredictable litigation environment and growing “anti-corporate sentiments.”
Munich Re, another major insurer, has also reduced its long-term business liability coverage in the U.S., fearing that the rising cost of lawsuits could trigger a financial crisis similar to the wave of asbestos and environmental claims that nearly collapsed the Lloyd’s of London insurance market in the 1990s.
The explosion of massive jury awards has sparked a broader debate over the factors driving these verdicts.
Business groups, including the U.S. Chamber of Commerce, blame the rise of litigation funders—investment firms that finance lawsuits in exchange for a share of the winnings. They argue that these funders encourage excessive litigation. However, litigation funders counter that they simply help plaintiffs take on powerful corporations and do not influence jury award amounts.
Others believe the surge in large verdicts is a result of political inaction, with courts stepping in to regulate corporate behavior in areas like consumer protection and healthcare.
As legal costs climb, both insurers and corporations are reconsidering their exposure to liability risks. Warren Buffett, whose company Berkshire Hathaway owns several major insurers, recently warned that the industry must find ways to combat “runaway verdicts” and excessive litigation.
Meanwhile, companies such as Bayer, which faces multi-billion-dollar lawsuits over its Roundup weedkiller, continue to challenge massive verdicts. However, they have remained silent on whether insurance will cover their legal losses.
With billion-dollar lawsuits becoming more frequent, corporations and insurers face an increasingly volatile legal landscape. As insurers retreat and businesses adjust their legal strategies, the long-term impact of America’s growing “nuclear verdict” phenomenon is likely to shape corporate decision-making for years to come.
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