Federal tort filings rise sharply, driven by inflation, stagnant policy limits, and nuclear verdicts, creating new challenges for insurers.
Federal Tort Filings Reach New Heights
A recent Lex Machina report shows that federal tort filings in the U.S. rose nearly 20% between 2023 and 2024 compared to the previous two years. The data highlights a significant shift in the litigation landscape, raising concerns for insurers already grappling with inflation and rising jury awards.
Key Factors Behind the Increase
- Inflation Impact – Higher living and medical costs are pushing more claims above the $75,000 federal jurisdiction threshold.
- Stagnant Policy Limits – Many liability and auto policies were written years ago and no longer reflect today’s costs, forcing more cases into court.
- Nuclear Verdicts – Jury awards exceeding $10 million are increasingly common, encouraging plaintiffs to pursue trials instead of settlements.
- Litigation Funding – Third-party financing and aggressive advertising by attorneys are making it easier for plaintiffs to sustain lengthy legal battles.
Decline in Medical Malpractice Cases
Interestingly, medical malpractice filings have dropped to their lowest level since 2009. Experts attribute this to legislative reforms, administrative changes, and adjustments in claims handling by federal agencies such as the Veterans Administration.
Insurers Turning to Subrogation
Major insurers — including State Farm, Geico, Allstate, and Progressive — are more frequently pursuing subrogation claims against the federal government. Many involve vehicle accidents with postal service trucks, underscoring how insurers are seeking to recover losses directly through litigation.
Emerging Areas of Risk
- Mass Torts: Environmental and health-related mass torts, often supported by litigation funding, represent a growing exposure.
- Premises Liability: Large retailers face increasing claims tied to customer safety and property incidents.
- Uninsured Motorist Cases: Lawsuits are rising where at-fault drivers lack sufficient coverage.
Industry Outlook
Analysts warn that this “new normal” in federal tort filings could reshape liability insurance in the coming years. Insurers may need to:
- Reassess coverage limits in light of inflation.
- Improve litigation management strategies.
- Monitor high-risk sectors like mass torts and retail liability.
- Expand recovery efforts through subrogation.
Conclusion
The upward trend in federal tort filings signals a challenging environment for the insurance industry. With inflation, large jury verdicts, and litigation funding all playing a role, insurers face mounting pressure to adapt policies and claims strategies to protect against escalating exposures.