Emerging Litigation Podcast
Litigators and other professionals share their thoughts on ELP about new legal theories, new areas of litigation, and how existing (sometimes old) laws are being asked to respond to emerging risks. The podcast is designed for plaintiff attorneys, defense counsel, corporations, risk professionals, litigation support companies, law students, or anyone interested in the law. The host is Tom Hagy, long-time legal news writer and enthusiast. He is former editor and publisher of Mealey's Litigation Reports, Founder and Editor-in-Chief of HB Litigation, co-owner of Critical Legal Content, and Editor-in-Chief of multiple legal blogs for clients. Contact him at Editor@LitigationConferences.com.
Emerging Litigation Podcast
Insurance Coverage Litigation's Modern Mayhem with Jeremy Moseley
Insurance. It’s something we all pay for and hope we never need. But behind the scenes, it’s a world of evolving risks, high-stakes litigation, and technology that’s changing faster than the laws that govern it.
In this episode of the Emerging Litigation Podcast, I interview Jeremy Moseley, partner at Spencer Fane in Denver, Colorado. Jeremy defends mass and class actions involving insurance regulations, healthcare, consumer products, and more. He’s seen firsthand how automation, AI, and climate change are presenting new risks — and he’s here to share what’s coming next.
We talk about how technology that makes claims handling faster and easier is now fueling lawsuits. How customized policies, while great for consumers, can leave dangerous gaps. And how juries today are awarding damages that would’ve seemed outrageous just a few years ago.
Jeremy explains “social inflation” and the rise of thermonuclear verdicts—why $20 million doesn’t sound like much anymore, and how insurers can push back with reality-based defense strategies. He also dives into climate change, shifting storm patterns, and how unprepared infrastructure are creating new underwriting challenges.
And yes, we talk about Dr. Evil, and Ecclesiastes, and my horse Jefferson from a dude ranch vacation in Colorado.
This episode is a warning, a guide, and a conversation about the future of insurance litigation. Jeremy’s insights are sharp, timely, and grounded in real-world experience. If you work in insurance, law, or just want to understand how emerging risks are reshaping the world around us, this one’s for you.
Thanks to Jeremy Moseley for joining us.
Tom Hagy
Host, The Emerging Litigation Podcast
💬 Have thoughts or want to contribute to future episodes? Email: Editor@LitigationConferences.com
Hello and welcome to the Emerging Litigation Podcast. I'm your host, Tom Hagy. If someone were to say to me that the insurance industry rules the world, I would say that's absurd, but there are many aspects of our lives and let's be positive here for a moment it goes against my general.
Jeremy Moseley:You know my general way.
Tom Hagy:There are aspects of our lives that, because insurance is designed to mitigate our risks, insurance companies themselves are motivated to mitigate their risks and by so doing they often mitigate ours. I don't know if any of that makes sense, but I always like to go to something we're all familiar with. Those are automobiles. I'm generalizing, but I think most of us anybody listening to this at least has driven one or seen one. You might be surprised to learn how much the insurance industry has shaped the safety features in our cars Over the last 50 years. Insurers have pushed for seatbelts, airbags, anti-lock brakes and electronic stability control, not just because they save lives, which is true, but because they reduce claims. Now they've backed crash tests crash test dummies you gotta love those. Theft prevention technology and even those rear view cameras and parking sensors we rely on today and I really rely on those today. More recently, they've been big supporters of advanced driver assistance systems like automatic emergency braking. On a personal level, speaking of those things, my car yells at me. Yells, is that's kind of a strong. It beeps at me whenever I cross the center line and if anyone were to count, I'd be shocked that I'm not pulled over for driving under the influence, at least once a week, because apparently I do cross that center line without signaling, so there's an argument for leaving your signal on constantly while you're driving. I just thought of that and I'm elderly. So, and those backup cameras, I'd like to report that whatever time I spent playing video games I wasn't huge in that, but I did play them quite a bit it made me much better at parking by camera than my wife, who was raised by a British lady who didn't even allow her to watch American TV. Can you imagine, yeah, I'm talking to you, shauna. Can you imagine, yeah, I'm talking to you, sean. So, yeah, so we often credit automakers for these things and obviously they are innovative, but insurers have been behind a lot of this. So today we're going to dive into the insurance industry and the ever-evolving risks it insures. We'll explore the challenges they face insuring these things, the emerging risks we face and, in some instances, the damages from risk they choose not to cover.
Tom Hagy:To address these, I had the pleasure of speaking with Jeremy A Mosley. He's a partner at Spencer Fane in Denver, in the beautiful state of Colorado. Jeremy defends mass actions and class actions dealing with insurance regulations, drugs and medical devices, professional services and consumer products. He has been successful in matters involving insurance, of course, healthcare, telecommunications and oil and gas. Before going into practice, he mediated some 200 settlement conferences while clerking for a federal magistrate judge. Jeremy told me that the only reason the parties would listen to him as a clerk is because he was working for a federal magistrate judge. I wish that had worked.
Tom Hagy:With parenting, jeremy. I'm not talking about his parenting, I don't know anything about that. Jeremy earned his JD from Notre Dame You've heard of it and his BA from Pensacola Christian College, and both with honors. I said that I assumed he studied. Jeremy confirmed that. Yes, yes, he did. And with that, here is Jeremy Mosley with Spencer Fain. I hope you enjoy it. So, jeremy Mosley, thank you very much for joining me today. Thank you, tom, I appreciate you having me. This is about insurance coverage litigation. We're going to talk about AI, climate change and other emerging risks and, just to open, I'll ask you just two general questions just to frame the discussion for us. So this episode is kind of a warning to insurers. So what I want to know is what's happening right now in insurance litigation that makes this message urgent, and how is technology which is meant to make insurers and the rest of us more efficient? How is it actually creating new legal risks? So why don't you talk first about the urgency of the message?
Jeremy Moseley:First of all, what we have right now, I would say, is we really have a confluence of events that can be very exciting, but also concerning Technology is changing rapidly. So we have advancements with AI that truly are exciting, but I believe that we are also seeing such an increase in litigation risk and high verdicts across the board, and also thermonuclear verdicts occurring at the same time, that insurers need to take into account as they evaluate all lines of business and new products. There's an ebb and flow to litigation. That always happens as certain issues will gain momentum.
Jeremy Moseley:We'll see filings across the country pick up when an issue gains traction, and one example I'll take right now, for example, is take the recent jury verdict against Meta finding violations of California privacy laws on a class-wide basis. You can expect to see class actions for violations of digital privacy and related to company data collection practices increase over the next several years against companies period because of that verdict. Well, insurers are not immune from these data collection lawsuits. For example, the state attorney general of Texas sued Allstate earlier this year, alleging its companies were violating Texas laws in collecting driver location and driver behavior data that it sold to other companies and used in setting insurance rates. So that's one area where we see technology changing rapidly and we're seeing litigation take off and we're going to continue to see it take off.
Tom Hagy:Yeah, it's a wonderful and scary world. In terms of the data collection, my gosh, the amazing things you can do with mass data analysis and knowing you know. And in terms of drivers, you know who's driving recklessly, who's speeding, who's whatever. I mean, this is all. I can see why it's valuable, but you can see where you know it could be misused. Talk a bit more about how technology, which is meant to make insurers more efficient, how's it actually creating new legal risks?
Jeremy Moseley:Well, as consumers, we love when technology works for us. It saves us time, which in turn saves us money. Everything that is done the same creates efficiency for a company, which is great, and we see advertisements, for example, for being able to take pictures of your car after an accident and get a check mailed to you for the damages. It's amazing. It saves time. It's efficient. You can imagine a computer analyzing the photos, determining the damaged pieces and creating an estimate, and you can do it, as a consumer, all from your phone in a matter of minutes. But the more automated the process is, the easier it is to say that all the claims are handled the same in a class action, and so we just take a second. If we take a second, we can walk through the process of how it starts off as a great technology and ends up in a place for a class action. That creates a risk. The faster a claim can be handled, the more claims a single person can handle. The more claims assigned to a single person, the larger their workload. The larger their workload, the easier it is to miss something and the less time they have to address a problem if something goes wrong.
Jeremy Moseley:You start off with something that's excellent and is useful and is a good thing to have, and you can end up in a situation where, if the majority of it is all done by a computer and the person doesn't have enough involvement, you're creating some legal risks along the way. That's one example in using auto. You can also see this on. Take, for example, health insurance. There's a lot of class actions out there against the health insurance industry for using AI to review medical bills and review diagnosis codes, and one good piece of that can be AI can review medical bills and identify diagnosis codes to see whether those diagnoses are actually related to a particular treatment or whether they're things that are wholly unrelated and can kind of help bring in to a reasonable realm treatment. That should be considered in the first place, but I think Cigna has some class actions against it.
Tom Hagy:There's a good segue into our first batch of questions around technology automation and class action. So we're seeing lawsuits over missed damages and uniform claim handling, as you've mentioned. What are plaintiffs really targeting in these cases? How can insurers balance efficiency with individualized claim review to avoid litigation, and what checks, balances or training steps should companies build into automated systems to reduce exposure? So start off with the first one what are plaintiffs really targeting in these cases?
Jeremy Moseley:Well, I think one thing I'd start with is, as Ecclesiastes says, there's nothing new under the sun. What the insurers look at as efficiency, plaintiff lawyers look at as a way to reduce claim payments. That's always going to be their theme. You're just looking to pay less. What insurers look at as time saving, even for the customer, the plaintiff lawyer looks at as a way to just increase profits for the company. So they're always looking at how claims are handled the same way in class actions to show uniform methods and uniform damages.
Tom Hagy:So then how can insurers balance efficiency with individualized claim review and avoid litigation?
Jeremy Moseley:The key is always the human decision making. Who has the ultimate say In claims handling? It's the human component. Is it just overseeing the process that's being done almost primarily by a computer, or are they actually making the decision? How much involvement do they have to individualize the process even slightly so that you can demonstrate something more individualized to avoid a class action or to demonstrate early on in the class action that class action treatment is not proper?
Tom Hagy:When you're talking to your clients on the insurance side, what checks, balances or training steps do you recommend they build into automated systems to reduce exposure?
Jeremy Moseley:You know, the first thing I'd say is most companies know to do this and to have these checks and balances in place, and sometimes it's more a matter of how well is it documented in the file or actually put into practice. So, no matter what the automation is that is used, first and foremost it is emphasizing its role in the claims process with the adjuster. So normally, where this comes up in the first place is there's a challenge to the automated process. You know I'm obviously on the litigation side. You're dealing with someone who was upset with something that went wrong. So what was that challenge? And did they provide some basis for why they're saying it should have been handled differently than just what an automated result would have been given with a human review? And so the emphasis needs to be that, whatever that automated process is, it's a tool to assist an adjuster in making a final decision, and it's one thing to say it and to say that the adjuster has that final decision, but it's another to really empower the adjuster with the ownership of a file. Does the adjuster ever actually deviate from that tool? And the balance that needs to be created is the balance between the consistency that insurers want across the board and how they handle claims with the autonomy that they want to give the adjuster in making decisions. A very common phrase in the insurance industry is that each claim is adjusted on its own merits. Well, putting that into practice means being able then to let that adjuster have that autonomy where they can actually, when documented in the claim file document what decision they made to deviate from the tool, if you will and that can be documenting why they followed the tool and documenting why they did not follow the tool, but that documentation then allows us to demonstrate in the litigation why class action treatment is not appropriate.
Jeremy Moseley:Another thing that can be helpful when we're talking about an automated process is when it involves the consumer. A lot of these processes are behind the scenes, but when we're dealing with an automated process that involves the consumer, a lot of these processes are behind the scenes. But when we're dealing with an automated process that involves the consumer like they're going to take photos and upload it through an app is to use consent language and to actually, in the app, have things that they're clicking on, that they agree that this is how they're going to start their claim, or the steps they're going to take in the claim. So, just like going back to the beginning, when we talked about data privacy and data collection lawsuits, one of the big things that is going to be used to prevent those in the future is going to be how good is your consent language?
Jeremy Moseley:It's the same thing here how using consent language up front so that the insured is agreeing that this is the process that they're using and they've decided to do their claim or start their claim this way, is a good way to put things in place that they're recognizing. They could have called the adjuster, they could have gone to a body shop, but they've decided to go this way. That's faster for them, for their own convenience, as a way to. It's not going to stop. Nothing can stop someone from suing later, right, but it at least starts a good process or risk way of minimizing risk up front if you had them acknowledge that they are consenting to starting the process this way.
Tom Hagy:Yeah, so we've got consumers posting or sending their uploads of their damaged car. So have we already had AI damage your car for you in your claim and submitting your cars all bashed up like it was in Grand Theft Auto or something. Has that happened?
Jeremy Moseley:We don't know Not to my knowledge but I think what one of the things you started with was the missed damage, and I think what you're. We're going to unpack that for just a moment. What's underlying that is that you've got a situation of the photos are uploaded. The first level of review is going to be some level of damage that can be seen from those photos. Somebody gets their check and goes on about their life and let's say it's not that major of damage so they don't bother to actually take it in and get it repaired.
Jeremy Moseley:But the reality is, if they had gone to a shop, maybe some human reviewing that would have noticed more damage and they would have written a more detailed estimate and it would have paid out more money. And so the theory of liability is you have this process in place because people will go this faster route and then you will write a check. That is a smaller check and what was intended to be and is a great time-saving method for the consumer because they can take these pictures, get a starting estimate and get paid immediately the plaintiff's lawyer turns into no, you're doing this to save money, because you don't want to actually write larger checks. That's the theory of liability in the lawsuit, but the reality is most people just want to submit their basic damage and only if they feel like getting it repaired do they want to take the time to go into a shop and actually get the more detailed estimate and fully get paid the cost of a full repair when they're actually getting it repaired.
Tom Hagy:I'm just imagining there'll be a time when there are just sensors all over a car, you can say this busted the fuel pipe, or whatever, this busted the muffler. You know, I mean, it's already judging, it's already measuring other things.
Jeremy Moseley:That's probably true At some point. You know they'll be able to just get an upload from the car sensors for a couple of the damage as well.
Tom Hagy:Yeah, yeah, that could be handy in a lot of ways.
Jeremy Moseley:By then, the cost of our cars will be also significant as well.
Tom Hagy:Right, yeah, that's true, and I also want to give you credit. This is the first mention of Ecclesiastes on the podcast. I think we had Deuteronomy once. I think I brought that up. Next, the customization of insurance policies. And here we're. You know, we've heard of these claims lawsuits claiming I didn't know I needed it and you didn't tell me well enough. How is the push for more customized insurance products driving litigation risk? You've touched on it a bit need to choose to close to protect themselves, and how can carriers design policies that meet customer needs without creating liability for what's left out? So take the first one how is the push for more customized insurance products driving litigation risk?
Jeremy Moseley:Well, customers are always looking for choices and technology allows carriers to customize policies like never before. The reality is, insurance is something you pay for and hope you never actually need. So for auto coverage, most states mandate fairly low limits, usually focused on liability coverage, and for homeowners coverage, the mortgage company only cares about whether the mortgage amount is covered. These are relatively minimal standards. For example, no state, and really no one, mandates life insurance, even though it's a very good thing to have. So litigation risk I see occurring in two ways. First, as you said, you have insurance claiming after the fact that they would have purchased that coverage if the carrier offered it more clearly or explained it better. So the more customization you have, the more potential for gaps in coverage. You have Gaps. The customer chose up front when what they really cared about was a lower premium, but now they wish they had that coverage. What they really cared about was the lower premium, but now they wish they had that coverage.
Jeremy Moseley:Second, the more customization you have on the front end, the higher the chance you have of not identifying the correct coverages on the claims floor. When policy coverages are uniform, adjusters step into every claim, at least knowing what coverages are available and potential damages to evaluate for a given state, and previously there were relatively few coverages that might change, like whether someone has comprehensive and collision coverage for auto, for example. But the more coverages that might change like whether you've got a long list of different endorsements the more the adjuster has to make sure they have those coverages and benefits accurate when they're adjusting a claim. Now, this is not an entirely new phenomenon there, like I said, have been some level of customization before but it's certainly an area I've seen litigation in previously, for years, and so with more, with this push for more customization, I expect to see an increase in litigation in this area to match it as well.
Tom Hagy:Okay, so talk about then the communication or disclosure gaps insurers need to close to protect themselves.
Jeremy Moseley:This is an area where I think technology can really benefit the insurer, though it might take some data storage to do it. So some states do have specific disclosure forms for certain coverages you have to provide an insured, so you already know what you have to tell them for those certain coverages, but other states don't. Now, if this is online, for example, one option would be to record what pages the insured has been shown and what your disclosure boxes show what they actually had to click on for the disclosure to move on, whether they accepted the coverage or not that they had to accept this disclosure. Well, save that disclosure in the application application. If you're doing this on the phone, record the disclosures, whether that means you played a disclosure that was a phone recording to them, or whether it's a disclosure that's read by the agent or policy services who's you know working with them to determine what coverages they're going to determine in their customization that they want. If it's through an agent you know, include those disclosures in an application.
Jeremy Moseley:I think most of this being driven by e-commerce means that the reality is we're talking about this being done online most of the time, and that gives the insurers a lot of flexibility to create some excellent disclosure boxes, acceptance screens and things like that, that they can have adequate disclosures and then save. That is really the key is making sure that the technology that they've used then allows them to save what the insured saw and clicked on and agreed to on the back end so that they have it for later when or if there's a challenge. Now you can never reduce risk to zero, of course, but so you still have the potential. Someone will allege that the disclosure they read wasn't good enough. That won't go away, but having that backstop of here's the disclosures that were provided and that they clicked on is a big difference If you're going to allow that customization to be able to show they did have all these options. And here's everything that they selected and chose not to accept at the time.
Tom Hagy:Lastly, how can carriers design policies to meet customer needs without creating liability for what's left out?
Jeremy Moseley:There are a lot of good policies out there with good options. What I would say is documenting your disclosure really is the key, even when it's not required by state law. That is the best way to mitigate litigation risk. I handle litigation frequently where we are addressing the fact that a particular disclosure was not required by state law and it is one of the elements and a factor against the plaintiff's claims, but it is not always dispositive, particularly early in the litigation, depending on state law. So the difference between winning on summary judgment at the end of discovery and trying to avoid being sued in the first place is that kind of disclosure that, just because you're not required to have it under state law, it can be a good practice to have in place.
Tom Hagy:So let's move on to social inflation and nuclear verdicts, or thermonuclear verdicts as you call them. So this is social inflation is shifting how juries think about damages. So why aren't nuclear verdicts less surprising today than they used to be, or why are they more prevalent? What can insurers and defense teams do to counteract juror bias and changing cultural expectations around compensation, and are there proactive steps beyond litigation that insurers can take to address this trend? So let's take the first one First. If you could just describe what is meant by social inflation and why are nuclear verdicts more prevalent?
Jeremy Moseley:Social inflation refers to the fact that everything costs more, and this idea that numbers are just larger and that when we go to look at verdicts these days and we look at the cost associated with litigation and what injuries are awarding, the numbers are just larger than they've been in the last few years. That's a trend that we see period and the reality is that is a trend that's been here for a few years and, in my opinion, it's not going away. Here's what I would start with. I would start with how we talk about money in the media. When we talk about money now, we talk about billionaires. When we talk about rich people, we don't talk about millionaires. When we talk about our national debt, we talk about it in the trillions and in fact, even when we've been talking about our deficit just our national deficit, our annual budget deficit year over year that is in the trillions. And recently we've been talking about if you listen to in the news the largest companies and what their market cap is. Even that is now in the trillions, and it was just a few years ago when the first company to break into the trillions for a market cap was making news. So in just the last few years, we've really changed the way we talk in the news about money and so, therefore, what people are hearing, what jurors are hearing about, how we talk about money, has changed significantly. If we want to talk five years ago pre-COVID and post-COVID our concept in terms of just a national discussion of money is different, and I'll give you an example of what I believe here is going to be just a generational shift in what we see for verdicts and money going forward.
Jeremy Moseley:In that context, when I first started practicing law, I was talking to a senior partner about a case and we were talking about discovery and what was coming up and some issues. And he said to me you know, that is the $64,000 question. And I looked at him. I had no idea what he was talking about. He had to explain to me that there was a game show from before I was paying attention to TV, although was a game show where that was the big question and you got $64,000 for getting it right. So, to give you an idea, I went and looked this up. The game show who Wants to Be a Millionaire debuted in 1999, 26 years ago and at the time the idea of winning a million dollars was a pretty big deal. Well, today that would not be such a big deal to a lot of people to only get a million dollars, if you will. That's kind of where we are now I think, oh, I don't know. I mean, I would be very happy if you want to give me a million dollars.
Tom Hagy:I wouldn't get out of bed for less than a billion. No, I got you. Yeah, it's definitely different.
Jeremy Moseley:And here's the other thing with inflation since COVID, we talk now about how inflation has calmed down. We're, you know, finally in control of inflation, but we do so in terms of inflation year over year, and so what that means is we still have higher prices. They're just not continuing to go up as much. And even if we were to return to some lower prices on things, we're talking about a new normal, and that has desensitized people to higher costs and to a discussion of money, and the bottom line is this $20 million of someone else's money doesn't seem like that much.
Tom Hagy:Now, when you look at, I couldn't help but think about CEO pay and professional athlete pay. You know, when you hear some of these contracts that they get and a CEO will I don't know, maybe the company went bankrupt or had all kinds of problems and the CEO drops out, but they still get like $50 million or something. Yeah, you get used to hearing that. In terms of you know, guidance, what could insurers and defense teams do to counteract juror bias and changing cultural expectations around compensation?
Jeremy Moseley:juror bias and changing cultural expectations around compensation. You know lawyers talk a lot about anchoring in a trial and plaintiff lawyers refer to anchoring and they'll talk about, you know, large numbers to anchor to things like priceless art, public works projects or fighter jets and items that are in the billions of dollars, and they'll ask for damages in the hundreds of millions, if not billions, of dollars. To anchor to something you know very significant and that's one of the reasons that we see these thermonuclear verdicts is anchoring to numbers that are so significant, and there are several studies out there about how defense lawyers need to be doing the same thing in reverse. They call it reverse anchoring or providing a defensive anchor, and I agree, but I call it a reality check. Often the plaintiff lawyers are talking about these ridiculously high numbers and they're not tied to anything to do with the case, and what the defense needs to do is provide a reality check and tie it to the actual case, tie it to things that matter and that the jury can relate to in relationship to whatever is going on in the actual case. Take, for example, a plaintiff asking for $20 million in bad faith damages if you're talking about a bad faith insurance case against an insurer in Texas, for example, in Dallas, texas. The average annual wage in Dallas I looked it up is $66,500. Well, what they're asking for, if we're talking about non-economic bad faith damages of $20 million, is the equivalent of 300 years of the average annual earnings. That's the kind of concepts that need to be tied to reality to get a jury to understand. When we talk about $20 million of someone else's money, let's tie this down to reality. What was this plaintiff actually making as an average worker? If that's what they were making, 300 years of wages.
Jeremy Moseley:If we're talking about an insurance case, what was the policy coverage? Was it a property policy or an auto policy? What was the policy limit? You know, how many times the policy limit are they now asking for. Is it 20 times, 50 times the policy limit that they're now asking for? Tie it to things that are actually relevant to this case to demonstrate how high and ridiculous the number they're now asking for is.
Jeremy Moseley:Another example is you know for a punitive damage award? I saw last year In that context for punitive damages we're talking about. We're past the compensatory damages, right, so you've already awarded a lot of damages or, if you will, all the damages they think the plaintiff is entitled to for compensation. In Nevada State Court last summer actually just last year in August a jury entered a punitive damage award against Progressive for $100 million. That did get reduced by the judge after trial but in terms of in front of the jury, what was being asked for and what they awarded was $100 million. Well, if you take the average premium, auto insurance is expensive in Nevada. Premium auto insurance is expensive in Nevada. So if you take the average premium of, say, $2,400 for a year, that would take over 41,000 insureds to pay that award. That's the kind of tying it to reality when you're saying punish this company, they're asking for the premiums of 41,000 insureds to be paid to that plaintiff.
Tom Hagy:Competitive damages obviously has a different purpose. It's supposed to have a deterrent effect.
Jeremy Moseley:Yeah, it is, and that's why I think you can directly get into things like the premiums that are being asked for and the impact it will have on other insurers as well?
Tom Hagy:And so what about the proactive steps, beyond litigation, that insurers can take to address the trend of these nuclear verdicts?
Jeremy Moseley:I would say there are three things that insurers can look at clear verdicts. I would say there are three things that insurers can look at. The first and foremost is tort reform in the legislatures. Obviously, these outlandish verdicts don't help consumers. They raise the premiums for everyone and the way to get control of those is tort reform. That is kind of the main way to rein that in. The second, I would say, is risk management, both internally and with corporate insurers for their liability claims, having a greater focus on whatever safety programs. That's obviously an area that insurers focus on with their corporations, their corporate insurers anyway. But first and foremost that's what it often comes back to for these large verdicts is what was the safety program in place and why it wasn't sufficient. And that has to be and can be a place to not only focus on but make sure that the corporate insurers understand that they are going to need to focus on that as a high priority to avoid these verdicts being entered against them as well. That was second and third.
Jeremy Moseley:I think it's an issue of social change. The reality is society tends to be on a pendulum and we really have swung to the side that large corporations in general are evil and need to be punished. That's just where we are right now. It seems all companies, including insurers, can be working to change that and it doesn't happen overnight. But as we kind of started off talking about with this section about social inflation, the discussion about the billion-dollar companies, the billion-dollar CEOs, that mindset that underlies the thermonuclear verdicts.
Jeremy Moseley:It ties into this A lot of large companies. What are companies doing to show that they're a part of the company and that they're good neighbors? I think one of the things that happened as well is a lot of large companies waded into what you might call the culture war in the last few years, which ended up being very polarizing, and I think that had a negative impact on a lot of companies. And it's very tricky because consumers expect them to show their good neighbors and now they have to figure out how to get out of being involved in social issues that are polarizing. So I don't have the answer to that.
Tom Hagy:I think we're all dancing through torches. It's a super tricky time.
Jeremy Moseley:I think that's the issue is being able to show that they are part of a community, that they are good neighbors, and yet doing so in a way that reaches everyone and isn't in the middle of a controversy. So it is not an easy thing to do by any means, but that's the way to try to show that they are socially part of a good community.
Tom Hagy:Yeah, yeah, yeah, I mean throwing in my own as a policyholder. I think one of the best things well, this would be for, like, consumer level but one of the best things are the agents. I've had the same agent for almost 40 years, steve DiIorio. He still sends me ice cream on my birthday, I mean. And when we have conversations he takes time, asks on my birthday, I mean, and when we have conversations he takes time, asks about my kid. I mean it's just, we're not friends. I mean we don't go out and you know have, well, we're both half Italian. I was going to say we don't go out and have calzones, but well, he's all Italian. Pardon me, nevermind, I digress, but but anyway, it's's like when I think about that insurance company, I don't think about a corporation, I think about him, you know. I mean I had an accident. It's funny. My office was in his building. I had an accident right in front of his office with another one of his policyholders and we both. It was resolved before the end of the day. You know what I mean. It was just like, okay, this happens. But you know, and that's things you know.
Tom Hagy:I covered insurance for many years and you know when insurance companies can adequately forecast and have adequate reserves for the risks. That's one thing. Things go very smoothly. But, as you know, like in mass torts, I covered for years environmental coverage, litigation and insurance companies did not see that coming. Nobody saw it coming. A super fund came in and suddenly, oh my gosh, right, and that fight is still going on. And I don't know how many stories I wrote about the pollution exclusion, but it was easily hundreds. But anyway, back to my point is that's one thing they have in their arsenal are their agents.
Tom Hagy:But you also mentioned you used the word evil and it made me think of two things. One I believe for years I don't know if it's still the case, but in Arizona, I believe, the standard for proving bad faith on the part of an insurer, you had to prove that they had evil intent. Now I don't know if that's still true or not, but that was in the 90s, I think, when I was writing about it. So I'm going to look it up and see if evil is still the standard. The other thing I thought about was Dr Evil. When you talk about you know he's holding the planet hostage for a million dollars. Everybody looked at him. It's like no, no, a billion. It's keep going up. There's some inflation right there.
Jeremy Moseley:You're right and I guess you know. If that were to be made today, he would have to say $1 trillion, he would Yep.
Tom Hagy:You're right. You know you're right Because I think he just upped it to billions. So yeah, I don't know what's after trillion. Should I know Quadrillion? Is that right? Okay, I'll take that. Climate change and risk modeling I mean you talked about diving into social issues. It's funny how climate change is almost a social issue too. It's debatable. Almost a social issue too, it's like it's debatable. But climate change is the things I want to address is, you know, it's reshaping underwriting models. How are catastrophic events changing the loss profile for insurers? Why don't you go ahead and take that one first?
Jeremy Moseley:What we're seeing, first of all, are a lot of storms and catastrophic events that are 50-year events or 100-year events, but they're happening more often than that. So the increase in frequency is changing the risk. And second, we're seeing a shift in location. For example, I grew up in Kansas in Tornado Alley, and part of what that means is I knew what was coming and we heard the sirens. So first of all, we had sirens that went off regularly to test at noon on Wednesday during tornado season. We knew how to prepare and we knew what to expect.
Jeremy Moseley:The other thing is it's Kansas, so there's not a lot of people. So tornadoes can tear through a lot of places and you know, didn't do a lot of damage, other than I do recognize that they could damage crops and that could be taken care of through crop insurance and underwritten for it as well. But now we see a shift and we see those storms hitting different areas and striking farther east, including tornadoes that are striking farther east, including Middle Tennessee. In fact, I was just reading a meteorologist in Nashville posted last month tornado alley is shifting. We have already seen 27 tornadoes in middle Tennessee this year. Wow, that's the kind of change that we're seeing where storms have moved because of climate change, and so these catastrophic events or storms that may have been normal, if you will, for certain areas of the country are moving and now they're hitting a different location.
Tom Hagy:Yeah, Growing up in Ohio, even though that's not quite Kansas, but we still had tornadoes, especially in the middle part of the state. It was very flat and, yeah, the sirens. You know, you knew ahead of time and you knew where to go. Get out of the way, get under something sturdy. The good news about tornadoes at least they tend to be over quickly so you can get into a safe room. But you won't be there for a week. You just have to be there for a week. But man, the devastation is just. You can't believe it until you see it happen, it's true.
Jeremy Moseley:And another thing with intensity, as the intensity grows, that changes the devastation they can cause. Because my understanding is typically a tornado, when it hits a heat center, it spins off, and that's why they often don't go through cities, is it would hit that heat and it would go around the city because of the heat generated by a city. But when they're a lot more intense, they don't get spun off by the heat of the city and so then they'll go through a city. So when you have a much stronger storm and a much stronger tornado that's why those are have one that can actually go into a city and go through a city and cause more devastation as well.
Tom Hagy:So what happened? You mentioned Kansas not being densely populated, which must be nice I'd like to visit once in a while. I'd like to go from New York to Kansas and back, just so I can have a little bit of both. But what happens when population growth and unprepared infrastructure collide with climate-related risks? Because we're seeing not only storms, but you're also seeing that infrastructure isn't necessarily built for extreme temperatures and other events. So what happens?
Jeremy Moseley:I think, overall, what we have is an unprepared risk model. You have insurers who've been underwriting for, like I said, tornadoes in Kansas for decades. But what about Tennessee? You have a population that is not necessarily as prepared and, as you mentioned, a different infrastructure as well, and you have an infrastructure that is prepared for one set of events and is not prepared for one, the high heat and things that we're seeing and two, the storms or events that have shifted to a different area. So, as climate change not only brings these more severe storms, the shift in where the storms are located creates a different underwriting. So, as climate change not only brings these more severe storms, the shift in where the storms are located creates a different underwriting risk for the future, because the damages are occurring in a location and to a population that, historically, is not necessarily as prepared for that risk in the first place.
Tom Hagy:Well, how are premium bases and risk development strategies evolving, and what does that mean for litigation?
Jeremy Moseley:First of all, talking about premiums, this is what actuaries do and I imagine the question is can they do it fast enough and accurately enough when the weather in many ways appears to be so unpredictable? But one challenge as well is that state regulators control premium increases, and premium changes, therefore, are very reactionary. So while insurers may predict these risks and these shifts, until losses actually increase in an area, I expect they'll have significant resistance to increasing premiums for the new risk pool until existing losses support that change. So for the second thing you asked about related to litigation, some states have specific laws that address these kinds of risks and some states don't. So as the risks shift, I anticipate we'll see the litigation shift to new states, and I'll give you an example.
Jeremy Moseley:Litigation, of course, often follows catastrophic events, but in Colorado, after the 2012 wildfires, we saw a number of law firms from Texas and Florida move into Colorado and open offices here, and it wasn't just that you have more lawyers here to help those who had homes damaged. We saw an increase in both the claims practices and litigation practices for how claims had been handled and litigated in Florida and Texas, which was very different from how claims were handled and litigated in Colorado prior to that. So those are some of the things I think you'll see. Shift and change as well is that, as a pattern of storms and shift, you will see those changes in litigation follow, where it will also be the claims practices that will follow from state to state, which will then increase litigation as well.
Tom Hagy:If you could leave insurers or other listeners here with a one key warning, or two or a call to action, what would it be?
Jeremy Moseley:The first thing I'd say I think is really a warning, or, if you will, that, as I said earlier, I believe we are at the front end of a generational shift in litigation that we may be labeling in part as social inflation, but it is really here to stay. So there was a period after COVID where verdicts went high and there was a thought that this is just some pent-up anger and aggression related to being in our house for too long, and verdicts did go back down a little bit after that, but overall for damages. I think we're seeing a lot of verdicts that are going to stay high across the board and that there needs to be a recognition that, because of inflation overall and because, as I said, the way we talk about money has changed so much that verdicts, generally speaking, are going to be essentially a different level across the board than they were pre-COVID, and that this is, as I said, a generational shift in how we look at money and what we can expect to see in verdicts going forward.
Tom Hagy:So what do you think is going to be next? What's the next major wave of insurance litigation? Do you see?
Jeremy Moseley:I think it's already there in other areas and I think it's coming to insurers next, and I really do think it's going to be data-driven. I think it's going to be collection and the use of data. So, while it's mostly against other companies right now, I expect class action lawyers will keep working on ways to come after insurance companies next with how insurance companies use all the data they have, because the reality is, insurance companies have a whole lot of data, and so it's a matter of the class action lawyers looking for how can they turn that into a good class action.
Tom Hagy:The only question I have is now. You've mentioned COVID as being the pandemic being over. I've been in my apartment since March of 2020. I'm not up on the news. I don't know if anything's happened since then.
Jeremy Moseley:I'm just saying that I think you're allowed to come out now if you'd like to. You want to is another story.
Tom Hagy:Is that legal advice? Okay, yeah, that's true, that's true.
Tom Hagy:But Colorado is a beautiful place to come visit. I love Colorado, so I'll have to stop there again someday, maybe find Jefferson, maybe ride my horse. Well, jeremy Mosley, thank you very much for talking with me about this today. I appreciate it. Thank you, tom, I appreciate the opportunity. Yeah, my horse, jefferson. That was a reference. I had been talking to Jeremy before we started recording about the best family vacation I ever had. Our girls were 8 and 10. They're now in their 30s, but it was a dude ranch in Lyons, colorado. It was a great time Fly fishing. They assigned you a horse. My horse's name was Jefferson and he was quite in charge, but that's why I mentioned that, and so I want to thank Jeremy Mosley for speaking with me today. He is partner at Spencer Fane in Denver, colorado. I appreciate him sharing his insights. Hey, if you want to reach me, want to work together or just complain, my contact information is in the show notes. Also, if you have a minute, give us a rating. Thanks for listening.