Why Product Liability Verdicts Are Rising and Ways Manufacturers Can Reduce Exposure

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Text: Constitution State Service. Travelers. A red umbrella. Products on Trial: The Shifting Product Liability Landscape. Presented by Constitution State Service and Travelers -- November 13, 2025.

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CORA HALL: Welcome. I'm Cora Hall, and I lead marketing strategy for Commercial Accounts Group, National Accounts Group, and National Property at Travelers and our TPA, Constitution State Services. We're thrilled you can join us today.

Manufacturers are facing product liability claims that are growing larger, more complex and more expensive. The data bears this out. The National Law Journal's latest report on the top 100 verdicts shows a striking rise in product liability awards. In fact, one out of every six cases on the list are a product liability verdict.

The second-highest verdict was over $5 billion and is a product liability case. And three of the top five verdicts overall were product-related. Rising jury verdicts involving plaintiff tactics and the growth of litigation funding are prolonging litigation and putting settlement costs higher.

Whether your company produces medical devices, pharmaceuticals, robotics or smart manufacturing components, or if you're in more traditional sectors like metals, plastic or industrial equipment, today's webinar will explore the evolving products liability landscape and what it means for manufacturers.

We'll break down the latest legal and regulatory shifts. We'll highlight the emerging trends impacting product design, manufacturing processes, warnings and supplier oversight, and share some practical strategies to help you reduce exposure before, during and after a claim.

Together, we'll look at what's changing in the courtroom, what's coming next and what steps you can take now to stay ahead of these emerging risks. But first, let me introduce our panel. Joining me today are Elise Schreier. She is the Vice President of Claim Product Liability here at Travelers. And her team focuses on litigation trends and claims strategy.

I'm also joined by Reese Cann. He is the Assistant Vice President of Risk Control at Travelers, and his team focuses on risk mitigation across the product life cycle. And finally, Alexandria Lahav, who's a professor of law at Cornell Law School. And she is an expert in legal system dynamics in the litigation funding landscape.

Before we get into our program, we want to mention our disclaimer. We'll take a few seconds just to give folks a chance to read it, and then we'll move on to our poll question.

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Title: Important Note. This material does not amend, or otherwise affect, the provisions or coverages of any insurance policy or bond issued by Travelers. It is not a representation that coverage does or does not exist for any particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law. Availability of coverage referenced in this material can depend on underwriting qualifications and state regulations. The information provided in this material is intended as informational and is not intended as, nor does it constitute, legal or professional advice or an endorsement or testimonial by Travelers for a particular product, service or company. Travelers does not warrant that adherence to, or compliance with, any recommendations, testimonials, best practices or guidelines will result in a particular outcome. In no event will Travelers, or any of its subsidiaries or affiliates, be liable in tort or in contract to anyone who has access to or uses this information for any purpose. Unless otherwise specified, no sponsorship, affiliation or endorsement relationship exists as between Travelers and any of the entities referenced in this presentation. Copyright 2025 The Travelers Indemnity Company. Travelers and The Travelers Umbrella are registered trademarks of The Travelers Indemnity Company in the U.S. and other countries. All rights reserved.

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Let's go to our poll. So here is the question for the team and everyone on our call today. What do you think drives the most product liability claim pressure today? Your first choice is investigations and evidence. Then we have potential damages, timelines and negotiations, or jury uncertainty. I'll give people a chance to--.

So what do we see here? It seems like jury uncertainty is the winner. And so we're going to learn more about all of those trends we just talked about. But let's start with pressures contributing to claims. So that Elise, I want to bring you in.

Please describe the shifting legal dynamics in product liability claims that you are seeing that matter to manufacturers of all sizes, even for routine incidents.

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Text: Shifting Legal Dynamics That Matter to Manufacturers. A stethoscope rests on a stack of cash.

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ELISE SCHREIER: Yeah, thanks, Cora. Glad to be here today to talk about an important topic for many of our audience members. So it may sound basic to say, but one of the biggest trends we're seeing in product liability cases is an increase in claim values, particularly with respect to bodily injury claims. And that's due to an escalating liability severity environment.

This environment is not unique to product manufacturers, but they've become a major target as you highlighted at the top, right. Those top 100 verdicts, product manufacturers are certainly targeted in this way. The change in the product liability landscape, it certainly didn't come about overnight, but it's been an accumulation of legal, regulatory, social changes that in my opinion have been pretty skillfully exploited by the plaintiff's bar over the past many years.

It feels like it's coming to a boiling over point. Right now it's really accented by all of these headlines of nuclear verdicts, why we're here today. And traditional economic indicators like wage inflation or medical cost trends, they can no longer explain the pace at which liability claims are escalating.

And that gap between financial inflation measures and what we're seeing in liability claim payouts, that's been termed social inflation. Many of us have heard that term. And social inflation is driven in significant part by plaintiff bar behaviors.

So some of those predominant factors contributing to this outsized claim inflation include attorney advertising and aggressive solicitation of claimants' mass tort coordination. We'll talk more about mass torts later today. Also, litigation funding hot topic right now, which we'll certainly dig into in more detail.

It has really turned the U.S. tort system into an investment and money-making mechanism for third parties who wouldn't otherwise be involved in that lawsuit. We also see bad faith exploitation and damages. The survey revealed that folks were concerned about damages. You certainly should be.

We are seeing outsized damage claims supported by unnecessary medical buildup, reptile theory tactics, like jury anchoring, and conflating liability with claim damage value. Related to that is the erosion of damage caps in certain states across the U.S.

And then another factor that we can't lose sight of is the attitudinal change in public sentiment, supporting litigation in general, and large awards as a way to add additional regulation to companies like product manufacturers.

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Cora Hall.

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CORA HALL: Thank you, Elise. Alexandra, I'd like to get your perspective. What are the changes in the product liability landscape that are so important for the audience to understand?

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Text: Understanding the Changing Landscape. A man in a business suit sits at a desk with a laptop and paperwork, holding his glasses while rubbing his temple.

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ALEXANDRA LAHAV: So I do agree with what we've said that the data show and rise in what people call nuclear verdicts. So these are the very high-value, over $10 million verdicts in a small number of cases. So that's the tip of an iceberg of filings.

But at the same time, I think it is also important to remember that we also see defense wins. So my observation is that we have a system that is highly variable. And so for that, I think for the people who noted variability in jury verdicts as a concern, I think there's something there in that observation.

That variability both results from but also contributes to increased corporate risk-taking in litigation. So I've observed that over the last like 10, 15 years, more defendants are willing to go to trial in high-stakes cases. And so you see a highly variable outcome as well.

I did a little study of verdicts over $10 million from 2024, even though these are a small subset of the cases, and about half of them involve fortune 500 companies. These are personal injury verdicts over $10 million. But the other half are not fortune 500 companies. So that is, I think, of interest to people in the audience.

The other thing that piggybacks on what Elise mentioned is that we do see influxes of claims against large, high-profile defendants' companies. Many of those companies, I think, are self-insured. And that has, I think, maybe exacerbated the risk-seeking that we're seeing among that set of defendants.

On the plaintiffs side, I think litigation funding might support some increase in the number of filings, but that's not true among the most established members of the plaintiffs bar. They're largely self-funded. And so they don't need those funding opportunities in order to continue to bring lawsuits.

Litigation funding trends are constantly evolving, and they are moving more into the tort space. So they've traditionally been a business to business type of funding, but we're seeing it move more into the tort space. And I think there is a dynamic there that drives up medical and injury costs.

And I think if there were an area where potential legislation would be appropriate to protect consumers, that would probably be the best area to focus on. What happens is you have these claims aggregators. They're not lawyers. They're hired by or they're funded by hedge funds.

And the hedge funds are looking for basically an investment vehicle that's not correlated with the market. And they seem to be targeting these high-visibility corporate defendants. And that does seem to be increasing the number of claims.

And there is some evidence, as Elise mentioned, that it also increases the cost of claims that are -- I don't know what the word is. It's not produced, but that come along with that type of litigation aggregator.

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Cora Hall.

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CORA HALL: Thank you. So I want to go back to what you said a little earlier. So it isn't only household name defendants that are seeing these outsized verdicts. What's driving the higher demands and the outcomes against lesser-known manufacturers?

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Alexandra Lahav. Text: Drivers of Change. White paper airplanes travel in lines up and to the right. A red paper airplane splits off from the group and travels upward.

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ALEXANDRA LAHAV: So outside of verdicts or maybe related, my theory on this is that historically, asbestos claim settlements have been one of the ways that allow pricing of claims -- so because it's a very deep and long history of claim valuation in that area. And plaintiff's lawyers tell me that that's often a baseline that they use for trying to negotiate claim value.

Asbestos settlement claim prices have increased. And in part, I think that may be driven by some jury verdicts in the asbestos space, not just mesothelioma, but also the cosmetic talc cancer cases. And so that, I think -- and especially the litigation around Johnson & Johnson's cosmetic talc has had there have been a lot of outsized verdicts in that litigation that I think contribute.

They're not the sole cause, but they contribute to this phenomenon. It's possible that the rise of national plaintiffs firms is also a part of what's contributing to this trend. So historically, plaintiffs law firms were smaller, and they were more regional or even state-based.

But over time, we've seen them grow in a more national direction. And that means that demand for settlement might rise because instead of being very localized, the benchmarks that are being used are national benchmarks. So we historically might have seen a difference between a settlement demanded in a low-cost area like, say, North Carolina versus Manhattan. But that seems to be evening out a little bit with the rise of these national firms.

Now, the other thing is -- and I think Reese is going to talk about this a little more later -- that I think is contributing to this is also some bad facts that could influence juries and also just the national conversation. So I think that when you have bad facts come out in discovery or bad communications are revealed, you tend to have higher verdicts. That's my observation.

And there the best defense is to not have those bad facts in the first place, if you can avoid it. And I think to be sensitive in your communications and not appear callous, that's always a good thing in general in life and I think especially when you're emailing about a product line.

And I would say that regardless of the -- I know we've talked about litigation funding. We're going to talk about it more. But the plaintiff's bar, regardless of whether the funding is playing a major role or not, is very creative. The new entrants are coming in to the space. And so you're always going to be facing some kind of litigation from just the creative plaintiff's bar.

There was a story that I know of of a very large defendant. They thought they had kind of settled a case and resolved it. And they had settled with all the major plaintiffs, powerful plaintiffs firms, and then new entrants came in. They were patent lawyers who just had an excellent ability to present scientific evidence. And once again that defendant was in the middle of it. So there is a lot of creativity going on there, and it can be hard to get ahead of it.

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Cora Hall.

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CORA HALL: Thank you. Reese, I want to bring you into the conversation because you're on the front line with manufacturing customers all the time. What trends are driving the liability landscape from your perspective and risk control?

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Trends Driving the Liability Landscape. A red 3D bar graph with increasing column heights is displayed on top of charts and grid-lined graphs. The bars rise from left to right, suggesting growth or increasing data values.

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REESE CANN: Yeah. Thanks for including me, Cora. And for those who are unfamiliar with risk control, we consult with our customers to help them understand and mitigate insurable risks, such as product liability. I'd say the trends lie more with key concerns is fortunately, most manufacturers haven't had liability claims.

The obvious one is the nuclear verdicts we've heard about. They make the headlines, and manufacturers, along with their insurance agents or brokers, have to consider the impact that escalating judgments might have on their business.

Legal advertising is certainly a daily reminder of this. Last year, it was estimated that there were almost 27 million legal ads at a cost of roughly 2 and a half billion. That doesn't happen without a favorable return on investment. So those ads are finding an audience and may even encourage a social or societal expectation to engage in litigation when there's a harm.

So the threat of litigation reinforces the need for manufacturers to have an expert understanding of how products might cause injury or damage and the consequences that might result both to the product user and to their own business.

One of those consequences to be mindful of might include the media attention to an incident. Public allegations also have their costs because manufacturers have to protect their brand and reputation. A second I would say changing judicial attitudes. Survey suggests that jurors don't trust corporations, not just the really big ones.

And the majority of jurors expect that manufacturers should do more to meet baseline safety requirements or standards. So, say if a company complies with those standards but declines to add additional safety features, an argument might be made that the company put the claimant at risk by selling a less safe product at a lower price, putting revenue ahead of safety, particularly if the safety features can be readily made or provided.

And lastly is the current social media culture. I saw a question pop up about that, but this applies differently. You look at the how-to videos on YouTube, TikTok influencers and the like, it's never been more important for manufacturers to engage in post-sale monitoring of their products.

Social media is here to stay, and plaintiff attorneys will see what they can find about your products. When allegations generally target a reasoning that a manufacturer knew or should have known of some hazard, social media is a place that the manufacturers need to check regularly for unsafe uses or practices and then take action.

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Cora Hall.

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CORA HALL: Thank you. So let's explore a little bit how a routine claim might escalate. Alexandra, as the emails surface around what did they know and when, how do juries process challenging documentation, especially if punitive damages aren't formally available?

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Text: Jury Thought Process. People sit in two rows. One man stands reading from a piece of paper.

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ALEXANDRA LAHAV: So my observation is that if you have a lawsuit where there's strong evidence of wrongdoing, particularly the kind of evidence that maybe there that company had tested the product but buried the information that they got from those tests, that tends to lead to higher jury verdicts.

I'm not 100% sure what the mechanism is, but there is some evidence from psychological studies that the sense of wrongdoing strongly contributes to at least liability findings. So there's a psychological study from the '90s where they gave participants a scenario where someone was in a car accident.

And the car accident is the same. The person is driving a little bit fast. And in one scenario, the person was going to pick up their mother, and in the other scenario, they were having an affair and were going to meet that person.

In the first scenario where they were kind of a model son, the juries tended to find no liability, even though the person was speeding, and in the second scenario, juries tended to find liability. It means that there's a connection between their moral objections and how they read the facts of a given situation. Now, that's not the same as damages, but you do need liability finding to get a damages award in the first place.

There's some evidence also from studies that were done in the first decade of the 21st century -- so the early 2000s -- that plaintiff's lawyers do argue that when some categories of damages are limited, they'll try to shift into other categories, less so with punitive damages, but with pain and suffering damages.

There's ways to translate pain and suffering -- what would have been a pain and suffering into something that's economic damages. And that mitigates some of that to the extent that they're damages caps for pain and suffering. That phenomenon is going to mitigate that to some extent.

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Cora Hall.

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CORA HALL: Thank you. Elise, question about plaintiffs start higher and hold longer. So what's behind the shift, and how should manufacturers, carriers and defense teams respond?

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Manufacturers Response. What can be done? A man and a woman stand in front of a robotic arm.

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ELISE SCHREIER: Yeah, that's absolutely right. Plaintiffs often have unreasonable expectations based on the billboards and headlines. And I find that they're no longer looking for just or fair compensation for their injuries, which is the point of a lawsuit. But really, they're looking for that lottery ticket.

And plaintiff attorneys similarly are emboldened by the increase of nuclear verdicts out there. So I believe that manufacturers, carriers, defense teams can respond effectively by being prepared to take a case to trial. Of course, a fair settlement offer should be made when money is owed. But if the plaintiff's going to remain at an unreasonably high demand, the best way we can help moderate this social inflation trend is to be prepared to take the case to the jury and to do it well. That's a key point there.

We need to look for opportunities to partner with our manufacturing insureds to tell their story, to humanize them as defendants, and to seek a fair value on that claim. Alexandra just talked about that it often has to do with the emotional response of the jury and whether they believe anyone was acting improperly. So we have to make sure we communicate the story.

We know that this can be done successfully. So really proud to share that over a 12-month moving period from August of last year to August of this year, Travelers achieved a 73% trial success rate on general liability claims and saw a reduction of just over $1 billion, billion with a B, from plaintiffs' last demand before trial to what we ultimately paid on behalf of our insured.

And that was all due to a preparedness and cooperation, a partnership in taking the case to trial. The thing is, while nuclear verdicts are absolutely increasing, they are putting pressure on the value of liability claims as a whole. We need to be aware of that.

It's also absolutely possible to take a case to trial, even a highly sympathetic one, and get a fair outcome. But in order to do that successfully, you need to be very thoughtful. Be well prepared. Have the right experts in your corner to help you achieve that result.

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Cora Hall.

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CORA HALL: Let's talk more about where you're seeing the most growth in damages. And can you share some concrete first response moves following the notice of a product liability claim that might help limit the impact of these trends?

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Text: First Response: Moves to Help Limit Growth in Damages. A woman holds a cellphone up to her ear while looking down at a paper.

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ELISE SCHREIER: Sure. So Alexandra touched on this a little bit earlier. Your damages that what creates the verdict in a trial, right, is in a bodily injury product manufacturing case. It's generally going to be made up of four components. You have your medical expenses. You have your wage loss. You have your non-economic damages, like pain and suffering.

And then in certain circumstances, you may also have a claim for punitive damages. And unlike the other three categories, punitive damages are not intended to compensate the injured party. They are intended to punish and deter bad behavior by the defendant.

While we're seeing some inflation in the medical expenses and wage consistent with broader economic trends, the exponential increase in damage awards, when we're talking about these nuclear verdicts, is really in the non-economic and punitive damages awarded.

In many states, there's no caps on the amount that the plaintiff can ask the jury for. And so if the jury has been conditioned in that anchoring process to give a large number and they want to do so, they look to that pain and suffering component or the punitive damage. They can award that very large number.

Now, you asked about tangible things a company can do. And there are some, thankfully. Number one most important thing to do is to respond to the loss promptly and effectively as soon as you know that a loss is out there. Be empathetic to the injured party. Notice your insurance carrier right away.

Gather and preserve that evidence so that you will have it to support you in defending your claim later, and take any necessary steps to prevent any other additional losses from occurring. And then if the claim goes into litigation, partner with your defense team, with your insurance company openly so the claim can be properly evaluated, and if appropriate, prepared for trial. Emphasis on that openly.

We want to make sure we know about any bad facts or documents or emails early so that we can properly evaluate and make our plan for the case. Because the truth is that claims involving timely notice, ethical responsibility, like that empathy I talked about, a commitment to safety, organize documentation, and that open communication and partnership, those types of claims rarely end in an outsized settlement or verdict.

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Cora Hall.

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CORA HALL: Thank you. Alexandra, we've heard litigation funding is having an impact. But litigation funding isn't just one thing. Can you break it down for us the different types of funding, and how does each type shift duration and settlement thresholds?

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Text: Different Types of Litigation Funding.

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ALEXANDRA LAHAV: Yeah, I'd be delighted to do that. So there are several different types of litigation funding. The first is there's a kind of funding that's directed towards the plaintiffs themselves -- so the individual who is injured.

These are structured as a loan, and they kind of resemble payday loans with high interest rates and from what I've seen are not very consumer-friendly type loans. Second, there's funding that goes directly to law firms to help them field cases, pay for the various costs of cases like experts and things like that.

Sometimes funders fund only a particular case. Sometimes they'll fund a portfolio of cases that a firm has. We mostly see this, as I think I mentioned earlier, in the commercial litigation context, where you have business to business type litigation.

And I have spoken with some funders who say they're trying to break into the tort space. So stay tuned for that, I guess. A third type of funding is sometimes there are some funders who provide loans pending the resolution of appeals.

So one of the things that I think we've implied, but maybe haven't explicitly mentioned, is that when you have one of these large verdicts or really any verdict, that's not the end of the story. There's very often going to be an appeal as well as a negotiation during the period while that's pending appeal.

And so there's a group of funders that help for a stopgap during that period when a verdict has been reached. But it's not clear how much of that verdict has been upheld or will be upheld. And finally, there are the claims aggregators that I mentioned who are also related to some of the concerns that Elise raised earlier.

These companies collect claims, and they then sell them to lawyers for a referral fee. A lot of the advertising that Reese mentioned that we see, I think, is from that funding source. These have really grown in the last 10, 15 years.

And I think they're a large part of what's driving the increase in attorney advertising and the increase in claims rate that we see in mass tort context. It seems to me like the targets tend to be the biggest companies of Fortune 100s. But I think there are more studies that need to be done about how they work.

And then related to them are the people who provide medical liens and loans. I don't have a lot of visibility into that. It's a little bit of a understudied area, but it appears that some of these aggregators are partnering with doctors to increase claim values by providing treatment.

When that treatment is appropriate, I think it's appropriate. But when the treatment may be either more than the person needs or even a harmful intervention, that's a reason, I think, for everyone to be concerned about that. That isn't just an insurance thing. It's a broader societal issue that people need to be protected.

Litigation funders of the kind I mentioned who fund law firms directly, who fund cases, they're very careful about vetting because they only get paid if there's a good outcome in the case from the plaintiff's point of view. It's usually structured as a loan, and it's a non-recourse loan. So they'll only get paid if there's a significant settlement or a jury verdict affirmed on appeal.

But we may be concerned that as these high returns that these litigation funders have are more publicized, that you might see new entrants into the system who are looking for returns but might not have such significant underwriting. And so we might be concerned about that in the future as this area of investment grows.

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Cora Hall.

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CORA HALL: So with large plaintiff firms often self-funding, smaller firms lean more on this capital. So what does that mean for claim aggregation trends and when making a decision to try a case or settle a case?

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ALEXANDRA LAHAV: So when you have the involvement of funding of claims aggregators, that's going to increase the size of the litigation. So you might have in the past had a litigation that maybe had a few thousand cases, but that number might rise exponentially if the aggregators are funding advertising and then collecting claims.

There are some really bad stories about these aggregators out there. I don't want to paint them all with a bad brush. There are obviously some very meritorious claims out there as well, but it is a concern. So while we see the most successful largest firms, they don't need this funding, and they don't really need this aggregation. They're able to get plenty of clients.

We see other firms maybe a little bit lower on the totem pole who are collecting claims, and there may be more concerned about, OK, how much vetting is going on for them? And there are strategies that defendants can use if they're in a mass tort to address these issues.

There's a very well-developed mass tort defense bar that develops these strategies. But I think what we're seeing is this increase in claims is driven by these aggregators who are producing much more advertising than we had seen in the past.

And we have new media that enable them rather, to have a much wider reach of that advertising, especially social media. So there is definitely a growth trend that's fueled by a set of actors who are these, what I'm calling these aggregators.

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Cora Hall.

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CORA HALL: Thank you. So, Elise, how does litigation funding show up in claim duration, timelines, plaintiff holdout behavior and multi-party case dynamics?

ELISE SCHREIER: Sure. So Alexandra walked us through the different types of litigation funding and the ones that the type that I see most directly impacting litigation against most medium, even large-size product manufacturers aren't necessarily in the mass tort or class action space.

So those one-off claims can be that direct to injured party loan. So this is injured party. It has a loss and they are connected to a litigation funding company, sometimes through their attorney, to get a check at the start of the case that presumably allows them to pursue their justice through their litigation up front.

And then they have to pay back that loan at the end of their case. As Alexandra said, they only have to pay it back if they win. These are unregulated currently in the U.S. So the interest rates are often extraordinarily high. So what we see in terms of impact on individual claims and lawsuits is that litigation funding really extends the lifespan of a claim.

Plaintiffs can afford to wait, and in some cases, they are incentivized to do so. The litigation funding company is going to make more money the longer the duration of the lawsuit because that's how these agreements work.

Additionally, the plaintiffs may be encouraged to undergo unnecessary medical treatment or stay out of work longer than they really need to because they're going to build up the damages of their case. It can also really impact negotiation and settlement dynamics, because now you have this additional third party with a financial stake in the litigation.

And as I said, these funders are going to make more money the longer the case is open so they may encourage continued litigation or taking verdicts up on appeal rather than early compromise of the case. Perhaps the most difficult situation that we see, we come up against, is where the plaintiff cannot settle for a reasonable value because the loan that they took out at the outset plus the interest has bubbled into an amount greater than the claim is reasonably worth.

They may be done with the lawsuit. They may think the number on the table is fair but it now is not equal to what their loan is. So what happens here is the parties are forced to try a case that they don't really want to try. And the verdict at the end of the day, it's very likely that the injured party themselves won't see a penny coming out of that verdict.

You also asked about the multi-party cases -- so shifting gears a little bit and talking about those class action, multi-party cases. The dynamics can be made very challenging with litigation funding in this space because some plaintiffs may have funding, and others may not, leading to uneven negotiation postures and just a lot of complexity in the coordination of that claim.

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Cora Hall.

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CORA HALL: Wow. A lot to digest there. Thank you. Reese, how well do manufacturers understand the importance of the potential of bad facts and bad communications as we just heard Alexandra and Elise describe? Do manufacturers understand these risks?

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REESE CANN: Well, it's probably not something that most manufacturers think about. They're really good at documenting many things intentionally but giving consideration to all the documents that they generate through the product life cycle, which begins with idea generation through manufacturing and then to marketing and customer feedback, for example.

Those probably aren't on their radar. A plaintiff will canvas anything discoverable in any format, whether on paper or digital, to see if there's anything there that could be used to cast a company in a negative light.

CORA HALL: So can you share some examples of what that might look like?

REESE CANN: Well, sure. And this may seem like the devil is in the details, but that's the point. So consider how a product is packaged or marketed. There's likely going to be a communication trail around that. But if the discussion includes comments about keeping warning language or graphics off of those materials because it might make them less attractive or reduce sales, then it might invite a negative view of their commitment to product safety.

Another example would include a change of suppliers. There's a lot of reasons companies might do that -- pricing, missing just in time deliveries and consistent quality, and so on. But if there's a comment recorded somewhere to accept, let's say a cheaper product with lesser quality, that could be used against them if the supplier's product should be directly related to causing some harm later on.

And probably the best example would be any documentation blaming some incident on the customer, especially if there's no evidence that they've reviewed the incident to determine if there's something that they could have done to remove the hazard or to reduce the likelihood of the incident.

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Cora Hall.

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CORA HALL: So what does good documentation look like?

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Following Safety Standards. The needle on a compass points to the word Quality.

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REESE CANN: Great question and maybe a better one. So at a high level, a document-retention policy is critical. Basically documentation needs to survive the expected life of the product. Not every bit of documentation has to be retained or should be retained.

Most manufacturers don't realize the depth of the types of documents that a plaintiff will demand during discovery or the toll that it can take on business resources and productivity to respond. So a good understanding of the litigation process is essential, and we recommend that they get legal counsel to help them develop a clear policy on the types of documents that they should retain.

So that's at a high level. For more specific things to document, it's important to note that plaintiffs will argue any of three prevalent theories of negligence within product liability: defective design, defective warnings and defective manufacturing quality. Manufacturers should be prepared to defend against each of these.

So for product design, there may be product safety standards or industry standards out there that relate to what you make. If so, you'd want to show that you meet those standards. But even with that, every manufacturer should have a product hazard analysis, which is a methodical approach that should be documented.

There are different methods of doing this, but a basic approach would involve considering who uses the product. And that might be an installer, an operator, a maintenance person and so on, or for consumer products, the public. And then considering how they might interact with the product and then what that engagement looks like, how could they be hurt.

The same approach should be used to determine if a product can cause physical damage as well, such as fire hazards. And then they need to design those hazards out as best they can. And that analysis is a key piece of documentation.

So when the hazards can't be removed by design, that's when warnings, labels and instructions come into play. A frequent argument by plaintiffs is that those had better -- had those been better in some way than a harm might have been prevented. The product hazard analysis is again important to identify the things that need to be warned against.

We recommend the companies reference ANSI Z535. It's a voluntary standard titled safety alerting, which gives guidance on how words like caution, warning, and danger differ in their meaning and application. Manufacturers should also look at warnings used by competitors and see how they compare. A plaintiff attorney will do the same.

For quality assurance, this should be straightforward to document, but these forms need to be accurate and performed by trained staff. And unfortunately, we find that often these documents are destroyed after a short time. Again, they need to be retained beyond the expected life of the product.

And then there's another type of document that can be very helpful, and that is contracts, particularly those with your suppliers. And if your supplier's product or service causes or contributes to a claim, you want them to be financially responsible for it.

This is a frequent gap that we see, whether a long-term relationship or a new one without contracts. And in the face of litigation, business relationships will be tested, which is why contracts should go beyond the business transaction itself and call out defense insurance and indemnification requirements.

And as a final note, good documentation isn't helpful if you can't find it. Companies need to know where their documentation resides. And a good example, but an unfortunate one for us is with contracts. We often find that when a claim occurs, they can't be found.

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Cora Hall.

(SPEECH)
CORA HALL: Wow. That's great advice. And it feels like very actionable, in terms of what people can take away. Elise, given that jurors expect companies to exceed minimum standards, as we just heard, when should manufacturers go beyond compliance, and which contractual risk transfer mechanisms are most important? And finally, how can both be documented prudently without creating unnecessary exposure?

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Text: Going Above and Beyond Compliance. A person standing at the top of a mountain raises their arms into a V.

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ELISE SCHREIER: That's a great question. And it's a tough one. Reese just went through all of that. That's expected of our product manufacturers. And it absolutely seems true that juries are holding product manufacturers to higher standards than ever before.

I talked at the top about using these nuclear verdicts, really high awards as a way to regulate within the jury. But I'd really encourage companies to think more holistically than trying to check a beyond compliance box. I understand it's human nature to just want to be told what to do and then go ahead and do it. Unfortunately, it's not quite that easy.

But what I will say is think about how your company, your products and your procedures may look in a courtroom. Will you be able to demonstrate a culture of care and accountability? I truly believe that juries understand reasonableness. I believe that juries can understand that balance between wanting to put a market or a product out into the market that is benefiting us all in some way and being reasonable about our safety standards.

So it is good to document how your safety is prioritized across your people, your processes, your communications. What documents could we be able to point to in a courtroom if we were to want to explain to the jury that you, in fact, foster a culture of care and accountability? How can you demonstrate your prioritization of safety?

Also things like how active you are in your community matters. We want to be able to share with the jury, tell the holistic story about how your company is bettering your industry and the lives of your consumers -- just a flavor of the things we'll want to make sure are clear to a jury following a loss.

And I'll go back to reinforce something we said earlier. We highly recommend that folks work with a lawyer to review documentation processes. Make sure that you are saving the right documents but not saving too much to make it over-burdensome on you if you were to face litigation.

So with respect to contractual risk transfer, the age-old standards of additional insured coverage and indemnification in your contract, they're still the gold standard. But the language in the contract is only good if you have a company at the other end that can uphold their promises.

So one of the things we've been seeing in the current environment is general liability. And umbrella insurance is getting more expensive. Some of your vendors may be carrying lower limits than they had previously. So this is something that you're going to want to check regularly and ask about if you enter into any new contracts.

And then the other piece is we also continue to be challenged in pursuing indemnification from non-U.S.-based companies, which is more and more of an issue with our global chain of commerce.

(DESCRIPTION)
Cora Hall.

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CORA HALL: Thank you. The next question is actually for our audience. So we are going to do a poll. Which action will you prioritize in the next 30 days? I'll give folks a chance to answer. We've got documentation and best practices, customer and supplier contracts, early case playbook, internal language discipline.

People are still voting. We'll see the results soon.

So certainly documenting best practices and customer and supplier contract review at the top of the list. We're nearing the end of our webinar, but I want to just give a chance for each of our presenters to share their last bit of advice. Reese, you'll go first and then Alexandra and Elise.

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REESE CANN: Well, sure. So most companies have a really good and thoughtful approach to making their products safe. I'm pleased to see the 55% poll results. I touched on it, at least touched on it, and I'm going to do it again. It's another thing entirely to be able to document your story to defend against a claim -- so design warnings, instructions, quality, post-sale activities, contracts.

You need to document retention policy to be able to manage all that information and produce information wherever it resides.

CORA HALL: Hey, Alexandra.

ALEXANDRA LAHAV: And once you've done that, I want to echo something Elise said earlier about being proactive with your settlement strategy. I think it's really important to have a sense of, how do I want the settlement strategy to go?

In some cases, some figuring out some game theory. If you're facing what looks like it's going to be maybe multiple suits, it could be really useful. The final takeaway for me is that I don't think litigation funding is going away. And I think therefore settlement strategy and partnering with your defense council is all the more important.

CORA HALL: Thank you. And Elise, your thoughts. Great.

ELISE SCHREIER: So this is not intended to be a webinar that scares anyone. So I'll end on a positive note. So I'd say, watch for the good news. We absolutely need to be aware of the headwinds that are out there. But we do have reasons to be optimistic.

As we've discussed, the risk of a nuclear verdict is increasing, but it remains true that a vast majority of companies will never see one, particularly if you've protected yourself with the right risk control measures, these strong contracts, and of course, a good insurance partner.

We've seen wins on product defect cases in some of our most volatile jurisdictions when we have the partnership of the policyholder and are able to put our expertise into action. We're also seeing great momentum building around the need for tort reform, which will benefit us all.

Florida and Georgia recently saw fairly sweeping reform, and several other states are taking up the topic. So I believe we're going to continue to see policymakers support the need for balance to ensure our tort system continues to be one that provides fair compensation, not that lottery ticket mentioned.

I also think we've got the support of the public on this. According to a recent APCIA survey conducted in conjunction with Munich Re, 86% of those polled agreed that lawmakers should address abuses of the legal system. So this will continue to be part of the conversation, and I really encourage those out there to get involved in tort reform efforts.

Lawmakers want to hear from business owners, from manufacturers like yourselves. They're already hearing from insurance companies. Really get involved in the tort reform efforts in your state to ensure that we can continue to have innovation and consumer safety thrive together.

(DESCRIPTION)
Cora Hall.

(SPEECH)
CORA HALL: Well, thank you, everyone. I'm going to summarize what I just heard. First, get proactive. Establish a rigorous design and testing protocols with solid documentation, and develop a first response playbook for swift action when issues arrive.

We want to think about strategic settlement planning. So use game theory principles to map scenarios before you need them. Third party litigation funding makes this approach essential. Consider a balanced risk perspective. While nuclear verdict risks are increasing, most companies with strong risk controls, contracts and insurance partnerships will never face one.

Recent wins and challenging jurisdictions prove proper preparation works. Engage in tort reform. States like Florida and Georgia have enacted significant reforms, with 86% of stakeholders supporting legal system improvements. Get involved in those state reform efforts.

And the bottom line is success requires proactive planning, strategic thinking and active participation in improving the legal landscape. Here at Travelers and our TPA Constitution State Services, we are here to help with comprehensive claim experience, advance forensic lab capabilities, sophisticated analytics and proven litigation support for defense strategy.

We are here to help you maximize your chances for a favorable outcome. So contact us or your agent and broker if you'd like to learn more about this topic. And we really thank you for joining us today.

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