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Marsh McLennan committed to helping tackle US litigation challenges, says Doyle

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(The Insurer) - Marsh McLennan is committed to working with the business community and policymakers to tackle the challenging U.S. litigation environment, with clients told that given current conditions they cannot buy enough excess liability coverage.

Speaking on the company's second-quarter earnings call, CEO John Doyle followed up on the recent opinion piece he and Chubb chief Evan Greenberg published in the Wall Street Journal on legal system abuse, noting that it is “effectively imposing a tax on our economy and causing a surge in U.S. liability insurance costs”.

Doyle noted that the U.S. already has the highest liability insurance rates in the world. The escalating costs associated with those “will only make it harder for companies to decide to invest and grow here”, he said.

Those that do invest in the U.S. will ultimately pass along those increased costs to consumers, the Marsh McLennan chief said.

The U.S. tort system “is intended to provide fair compensation to injured parties who have been wronged”, said Doyle.

However, the executive said “too often” tort litigation is supported by “a vast and growing industry with outside investors”.

“The result in many cases is that aggrieved parties see less than half of the settlement awards.

“Our clients are feeling the effects of this growing problem. Consider the rise of so-called nuclear verdicts – cases exceeding $100 million have grown 400% over the past decade according to the U.S. Chamber of Commerce,” he said.

That trend, Doyle said, “is encouraging more lawsuits and blockbuster verdicts, which drive up insurance costs”.

Doyle highlighted that last year the U.S. liability insurance market suffered the most severe adverse reserve development of any single line of coverage since the 2008 global financial crisis, with more than double the amount in 2024 compared with 2023.

“Over the past decade, U.S. excess casualty insurance rates have increased by a cumulative 150%,” said Doyle.

“Addressing these abuses will be challenging and take time. We are committed to working with the business community and policymakers to tackle this challenge.”

Responding to a question from KBW analyst Meyer Shields on whether clients are seeking additional protection given the challenging litigation environment, Doyle said many U.S. businesses are “trying to grind out earnings growth in a slower top-line growth environment, so we’re not seeing big take-up”.

“What I can tell you we're saying to our clients, though, is that you can't buy enough excess liability insurance in this environment,” Doyle stated.

Some clients are more exposed to the U.S. litigation environment than others, Doyle noted, adding that “it’s an eye-opening discussion” when talking to the company’s customers about nuclear verdicts and the broader increase in the frequency and severity of casualty claims.

“Many (clients) will maybe try to say, ‘Hey, it's not us, (it) couldn't happen here’ kind of thing.

“But our concern when we look at our portfolio is that it's just happening with too much frequency across our economy here in the U.S.”

Doyle on the earnings call also expressed his disappointment that proposed legislation in the Big Beautiful Bill that would have changed the tax policy around litigation financing failed to make the final cut.

“In many cases, an injured party gets less than 50% of the outcome of settlement,” said Doyle.

“That injured party, by the way, pays ordinary income tax in the United States. A (litigation) funder pays capital gains, a foreign investor pays zero tax. So it was a missed opportunity.”

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