Europe has been warned it needs to brace for the arrival of “nuclear verdicts” as the trend which has beset the US legal system is moving to new jurisdictions.

New research from the Swiss Re Institute warned that legal system abuse in the US is pushing liability costs far beyond economic trends, with lawsuits growing larger, verdicts bolder and litigation funding more aggressive than ever.

As a result liability excess inflation is accelerating, and Europe may soon follow as regulatory and funding shifts create similar pressures across the Atlantic.

The research’s key findings include:

> Liability Excess Inflation (LEI) reached 7% in the US in 2024, averaging 6% since 2019, exceeding economic inflation in seven of the last ten years.

> ‘Nuclear verdicts’ (awards over $10 million) jumped 50% last year, with median awards doubling since 2020.

> Litigation funding assets rose by 6% to $16.1 billion in 2024.

> 85% of Americans believe corporations prioritise profit over safety, and 79% support punitive damages, normalizing higher payouts.

Across Europe, new rules such as the EU’s Representative Actions Directive and Product Liability Directive will make collective claims easier and shift more burden of proof onto companies.

Third-party litigation funding is expanding fast in Europe, with around 300 funders now active across the EU. The UK, Netherlands and Portugal are becoming litigation hotspots as class actions broaden in scope.

For consumers globally, the ripple effect is higher premiums as mounting legal costs feed through to pricing.

Insurers face rising reserve charges worldwide, with no relief in sight unless reforms improve transparency and control over third-party funders.

Urs Baertschi, chief executive officer Property & Casualty Reinsurance, Swiss Re explained: “US litigation costs keep rising, and we now see similar dynamics beginning to emerge in parts of Europe. The surge in nuclear verdicts and expanded litigation funding are driving up legal expenses and settlement demands in the US. These costs ultimately act as a tax on consumers by increasing costs for goods and services, including insurance.

“Greater transparency around litigation funding is essential to legal system reform and critical to curb further systemic cost increases and the financial pressure that places on every household.”

The research added: “In our view, the key drivers for elevated liability claims costs in the US show no sign of abating. Fund flows from third-party litigation funding (TPLF) continue to grow, and a Behavioural Science survey that Swiss Re conducted in the US in 2025 finds signs that litigation culture is becoming increasingly widespread. In that survey, some 76% of US respondents said that damage awards in lawsuits are too low, up from 58% in 2016.

“Moreover, 85% find that large companies prioritise profit over safety, and 79% see punitive damages as the best deterrent for corporate wrongdoing. The outcome of this increasing litigious environment reflects in a rising frequency and severity of US nuclear verdicts (awards of over $10 million).”

It found since 2020, the number of nuclear verdicts has more than quadrupled, while the median value has more than doubled.