More and more tort cases are ending up in federal court, causing headaches for insurers across the U.S. A recent report from Lex Machina reveals that between 2023 and 2024, federal tort filings jumped almost 20% compared to the previous two years. The rise reflects changes that are making it easier for cases to reach federal courts, along with bigger jury awards and growing medical costs.
One big factor is inflation. Since 1996, the federal jurisdictional threshold has stayed at $75,000. But with rising medical bills, property damage costs, and lost wages, more claims now surpass that number, pushing them into federal court. On top of that, many insurance policies were bought years ago and haven’t kept up with inflation. This leaves claimants uncovered and more likely to sue to get the money they need.
There’s also a surge in so-called "nuclear verdicts"—jury awards over $10 million. These big payouts, which are growing faster than inflation, attract more claimants to take their cases to trial instead of settling early. Attorney advertising, like billboards and online campaigns, adds to this trend by encouraging people to reject the first offers from insurers.
Litigation funding is another game changer. This type of funding helps plaintiffs cover legal costs through their trials. With this financial support, cases that might have settled quickly are now lasting longer, increasing the exposure for insurers. Ron Porter, a product liability expert at Lex Machina, says these funds have shifted power away from law firms and individual plaintiffs who previously struggled to sustain long legal battles.
Not all types of tort cases are on the rise, though. Medical malpractice filings have fallen to their lowest levels since 2009. Changes in how Veterans Administration medical cases are handled and tort reforms in several states have led to more early resolutions and fewer lawsuits.
Insurers themselves are stepping up as plaintiffs more often, according to the report. Big names like State Farm, Allstate, Geico, and Progressive are actively filing Federal Tort Claims Act cases to recover money from the federal government, especially in accidents involving postal vehicles. This effort reflects insurers’ efforts to recoup some losses even as they face more claims.
Certain areas like premises liability claims, especially those involving large retailers, are also increasing steadily. This is a concern even for businesses carrying self-insurance or with high deductibles, signaling more risks insurers have to watch.
Overall, these trends suggest a shift in how tort cases play out. Insurers face more lawsuits, bigger jury verdicts, and have to deal with well-funded plaintiffs. They’ll need to rethink their strategies on coverage limits, recoveries, and legal handling to keep up with what some experts call the "new normal" in tort litigation.
Both Adam Mills Masarek and Ron Porter from Lex Machina emphasize that this rise isn’t just a cycle but a structural change. Inflation, unchanged federal thresholds, large jury awards, growing attorney marketing, and litigation financing all contribute to more cases moving into federal court and more claims going to trial. Mass torts connected to incidents like the Jackson, Mississippi water crisis are also on the radar as potential big risks for insurers.
In short, insurers are dealing with a tougher landscape where more claims end up in court, and stakes are higher than ever. Keeping a close eye on these evolving trends will be key for the industry moving forward.