# Bad Faith & Litigation > First- and third-party bad faith, statutory remedies in TX, FL and WA, Florida's 2023 reforms, time-limited demands, litigation management and social inflation. The claims rules in the earlier chapters are enforced by regulators, who count violations and fine patterns. Bad faith is enforced by juries, one claim at a time, and the damages are not capped by the policy limit. An insurer that unreasonably denies or delays its own insured's claim can owe the claim, interest, attorney's fees, damages for distress and sometimes punitive damages; a liability insurer that turns down a reasonable chance to settle a claim against its insured within the limits can owe the whole verdict, however far above the limits it lands. That exposure turns ordinary claim events (a demand letter with a deadline, a denial without a documented investigation, a status letter that never went out) into the facts of a lawsuit, and it is why plaintiffs' lawyers send time-limited demands and why states have spent the last few years legislating what those demands must contain. This chapter covers first- and third-party bad faith and the cases that define them, statutory remedies in Texas, Florida and Washington, Florida's 2023 reforms and what the state's data shows since, time-limited demands with their deadlines worked, punitive damages, litigation management and legal spend, and social inflation as insurers' filings describe it. The clocks whose breach is the usual evidence are in [Claim Handling Law & Clocks](https://www.syntaqx.com/books/insurance/claim-handling-law); reserve effects are in [Exposures, Reserves & Payments](https://www.syntaqx.com/books/insurance/reserves-and-payments) and [Loss Reserving & Development](https://www.syntaqx.com/books/insurance/loss-reserving). ## First-Party and Third-Party Bad Faith **First-party bad faith** is about the insurer's treatment of its own insured's claim. California's Supreme Court held in *Gruenberg v. Aetna Insurance Co.* (1973) that "when the insurer unreasonably and in bad faith withholds payment of the claim of its insured, it is subject to liability in tort," because the duty of good faith and fair dealing is "immanent in the contract." Texas recognizes the tort too, and its standard since *Universe Life Insurance Co. v. Giles* (1997) is whether the insurer "knew or should have known that it was reasonably clear that the claim was covered," a reformulation the court said "recasts the liability standard in positive terms." Texas has also drawn lines around it: workers' compensation claimants can't sue the carrier for common-law bad faith or under the Insurance Code's unfair settlement provisions (*Texas Mutual Insurance Co. v. Ruttiger*, 2012), and an insured generally "cannot recover policy benefits as damages for an insurer's statutory violation" unless the policy entitles them to the benefits (*USAA Texas Lloyds Co. v. Menchaca*, 2018, which set out five rules for when policy benefits and extra-contractual damages can be recovered). **Third-party bad faith** is about a liability insurer's duty to its insured when someone else sues. The insurer controls the defense and settlement, the insured bears the risk above the limits, and the cases put the burden on the insurer. Texas's *G. A. Stowers Furniture Co. v. American Indemnity Co.* (1929) held the insurer to "that degree of care and diligence which a man of ordinary care and prudence would exercise in the management of his own business": the insurer had a $5,000 limit, refused a $4,000 offer, and the verdict was $12,207. California's *Crisci v. Security Insurance Co.* (1967) asked "whether a prudent insurer without policy limits would have accepted the settlement offer" and held that "an insurer should not be permitted to further its own interests by rejecting opportunities to settle within the policy limits": a $10,000 limit, a $9,000 demand refused, a $101,000 verdict, and the insurer liable for the excess plus damages for the insured's mental suffering. The rule both cases make is the one claim systems must serve: **a demand within limits on a claim with excess exposure is a decision point with a deadline**, and the record of how the insurer evaluated it is the evidence. ## Statutory Remedies Model 900 creates no private cause of action. Several states created one anyway: - **Texas.** Insurance Code 541.060 makes it an unfair practice to fail "to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer's liability has become reasonably clear," or to refuse "to pay a claim without conducting a reasonable investigation." A person harmed may recover actual damages, court costs and attorney's fees, and for knowing conduct up to "three times the amount of actual damages" (541.152). Chapter 542 adds 18% interest for late payment ([Texas Chapter 542 Interest](https://www.syntaqx.com/books/insurance/claim-handling-law#texas-chapter-542-interest)). Chapter 542A, added in 2017 for property damage claims, requires written presuit notice at least 61 days before suit, stating the specific amount owed and the attorney's fees (542A.003), and scales fees by how close the judgment comes to the demand: at a ratio of judgment to demand of 0.8 or more, full fees; below 0.2, "the court may not award attorney's fees"; in between, the lesser of measures that include the ratio times the fees (542A.007). - **Washington.** The Insurance Fair Conduct Act, approved by referendum on November 6, 2007, lets a first-party claimant "unreasonably denied a claim for coverage or payment of benefits" recover actual damages, up to three times them, and attorney's fees, with written notice to the insurer and the insurance commissioner 20 days before suit (RCW 48.30.015). - **Florida.** Section 624.155 lets a person sue an insurer for not attempting in good faith to settle claims, after a 60-day civil remedy notice the insurer can cure; Florida rewrote its limits in 2023 (below). The systems point: each statute has its own notice (Texas's 61 days, Washington's 20, Florida's 60), and each notice is a dated event on the claim with a response task, exactly like a regulator's inquiry. ## Florida's 2023 Changes Florida was the state where property claim litigation broke the market, and its own regulator's data shows the scale. In the Office of Insurance Regulation's 2026 report, using NAIC market conduct annual statement data, Florida's share of US homeowners claims and of US homeowners claim lawsuits were: | Year | Florida share of US homeowners claims | Florida share of US homeowners suits | | --- | --- | --- | | 2019 | 8.16% | 76.45% | | 2020 | 8.81% | 79.16% | | 2021 | 6.91% | 76.00% | | 2022 | 14.93% | 70.83% | | 2023 | 9.73% | 71.59% | | 2024 | 12.33% | 73.15% | | 2025 (preliminary) | 4.85% | 41.29% | The Legislature answered in two steps. Senate Bill 2-A (ch. 2022-271) banned assignment of benefits for new policies from 2023 ([Property Claims](https://www.syntaqx.com/books/insurance/property-claims#assignment-of-benefits-and-florida-s-ban)) and changed property claim notice rules. **House Bill 837** (ch. 2023-15, approved and effective March 24, 2023) changed civil litigation generally: - **Bad faith (624.155, as amended).** No bad faith action on a liability claim "if the insurer tenders the lesser of the policy limits or the amount demanded" within 90 days after receiving actual notice of the claim with sufficient evidence to support its amount; "mere negligence alone is insufficient to constitute bad faith"; the insured, claimant and their representatives have a duty of good faith in furnishing information, making demands, setting deadlines and settling, and the trier of fact may reduce damages for its breach; with multiple claimants and insufficient limits, the insurer is protected if it files interpleader or offers the limits to binding arbitration within 90 days. - **One-way attorney's fees repealed.** Section 627.428, the one-way attorney's fee statute under which insurers paid the fees of insureds who won judgments against them, was repealed (§11), for policies issued or renewed after the effective date (§29). - **Shorter limitation period.** General negligence actions must be brought within two years instead of four, for causes of action accruing after the effective date (§3, §28). - **Modified comparative fault.** A party more than 50% at fault for their own harm recovers nothing (768.81(6), medical negligence excepted). - **Medical damages evidence.** New section 768.0427 governs evidence of medical expenses and letters of protection. What the data shows since, from the same report: personal residential service-of-process filings (lawsuits served on insurers) fell 23% from 2023 to 2024 and 25% from 2024 to 2025; homeowners defense and cost containment per claim fell from $947.38 in 2022 to $720.00 in 2025; and the preliminary 2025 share of US homeowners suits, 41.29%, was the lowest in the series. The cost difference litigation makes is in the closed claim data: in 2022, OIR counted 732,390 closed claims, 58,395 of them litigated, with average loss adjustment expense of $9,934 on litigated claims against $1,576 on the rest. OIR also reports approving 21 additional property and casualty insurers since the reforms. ## Time-Limited Demands A **time-limited demand** offers to settle a liability claim, usually for the policy limits, if the insurer accepts by a deadline. Under *Stowers* and *Crisci*, an insurer that lets a reasonable one expire can own the excess verdict, so demands are sometimes written to be hard to accept in time. States now set rules for them: - **California, Code of Civil Procedure 999 to 999.5** (for demands transmitted on or after January 1, 2023, against auto, motor vehicle, homeowner and commercial premises liability policies): the demand must be in writing, "labeled as a time-limited demand or reference this section," give at least 30 days to accept from transmission by email, fax or certified mail (33 days by regular mail), make a "clear and unequivocal offer to settle all claims within policy limits" with a complete release, and include the date and location of the loss, the claim number if known, a list of the injuries and medical records sufficient to support the claim (999.1). The insurer accepts by written acceptance of the material terms; asking for clarification isn't a counteroffer; if it doesn't accept, it "shall notify the claimant, in writing, of its decision and the basis for its decision" before the demand expires (999.3). A noncompliant demand isn't treated as a reasonable offer to settle in a later bad faith suit, except for unrepresented claimants (999.4). - **Georgia, O.C.G.A. 9-11-67.1** (motor vehicle injury claims, before an answer is filed, for causes of action arising on or after July 1, 2021 in the version opened): the offer must allow at least 30 days from receipt to accept, be sent by certified mail or statutory overnight delivery, state the amount, the parties to be released, the type of release and the claims, include medical records, and allow at least 40 days for payment; a written request for reasonable clarification isn't a counteroffer. - **Florida, 624.155(4)**: not a demand rule but a safe harbor from it: tendering the lesser of the limits or the demand within 90 days of actual notice with sufficient evidence ends bad faith exposure on that claim. ### Worked Numbers: One Demand, Three States Mine. A claimant's lawyer sends a demand for the $100,000 bodily injury limit on **Monday, March 1, 2027**; the insurer receives it on **Wednesday, March 3, 2027**, with the medical records. | State | Rule | Deadline | | --- | --- | --- | | California, sent by email | 30 days from transmission | Wednesday, March 31, 2027 | | California, sent by regular mail | 33 days from transmission | Saturday, April 3, 2027 | | Georgia | At least 30 days from receipt | No earlier than Friday, April 2, 2027; payment period at least 40 days | | Florida | Tender within 90 days of actual notice for the safe harbor | Tuesday, June 1, 2027 | If the demand was $95,000 and the insurer let it lapse, and the jury returns $640,000, the insured is exposed to **$540,000** above the limit, and under the *Crisci* test the question is whether a prudent insurer without limits would have paid $95,000 to avoid that risk. The system's job is to make sure the demand was a dated event, the deadline (computed from the transmission method, which the system must capture) was a task with escalation, the evaluation (liability, damages, the excess exposure) was written down before the deadline, and the response (acceptance, rejection with reasons as California requires, or a request for clarification) was sent and proved. ## Punitive Damages Bad faith verdicts can include punitive damages, and the Constitution limits them. In *State Farm Mutual Automobile Insurance Co. v. Campbell* (2003), the Supreme Court held a $145 million punitive award excessive where full compensatory damages were $1 million, observing that "few awards exceeding a single-digit ratio between punitive and compensatory damages" will satisfy due process. For the system this is less about the ratio than about what juries see: the punitive case is built from claim manuals, guidelines, incentive programs and patterns across files, so the reserving and settlement guidelines in the claim system are evidence too. ## Litigation Management When a claim is in suit, the insurer manages it as a matter: defense counsel (staff counsel or a panel firm) assigned under litigation guidelines, a budget, a defense strategy reported to the adjuster, coverage counsel separately if coverage is reserved ([First Notice, Coverage & Triage](https://www.syntaqx.com/books/insurance/first-notice-and-triage#coverage-positions-reservations-of-rights-and-denials)), and legal invoices reviewed against the guidelines. Defense costs are DCC and are reserved and paid on the exposure. Legal invoices come in standard electronic formats. The **UTBMS** codes ("a series of codes used to classify legal services performed by a legal vendor in an electronic invoice submission"), developed in the mid-1990s by the ABA, the Association of Corporate Counsel and PricewaterhouseCoopers, classify each line by task, activity and expense; the 1997 litigation code set "includes 5 phases and 29 more granular task codes." **LEDES** formats (LEDES 98B, 98BI, 2000 and XML 2.0 to 2.2, maintained by the LEDES Oversight Committee, with an API ratified in 2020) carry the invoice. With coded lines, invoice review can apply guideline rules automatically (block billing, rate caps, staffing limits, unapproved experts), and DCC can be analyzed by phase across matters, which is how an insurer sees what its defense spend buys. ## Legal Spend and Social Inflation in the Filings "Social inflation" is insurers' name for claim costs rising faster than economic inflation because of the legal system: larger verdicts, more litigation, litigation funding, new theories of liability. EDGAR full-text search finds the phrase in 54 annual reports filed in 2026 through November 9. Four examples, from 10-Ks for 2025: | Filer | What it says | | --- | --- | | **CNA** (filed February 10, 2026) | "The impact of social inflation continues to be significant, and the trajectory of its future impact remains uncertain," citing reviver statutes for old claims, abusive litigation practices and "the growth of third-party litigation financing" | | **Everest Group** (filed February 26, 2026) | Losses "exacerbated by social inflation factors ... such as uncertain legal system outcomes, increased frequency of high-severity claims and third-party litigation funding"; it increased loss reserves by $657 million pre-tax and net of reinsurance in 2025, mainly unfavorable prior-year development in excess casualty and US liability lines | | **W. R. Berkley** (filed February 27, 2026) | "Loss costs continue to increase, principally due to continued social inflation," including "higher and more frequent claims, more favorable judgments and legislated increases" | | **Markel** (filed February 26, 2026) | Exposure to "rising costs, litigation funding, social inflation, including new or expanded theories of liability, higher adverse verdicts" | The industry's own research arm puts numbers on the trend: a 2026 study by the Insurance Information Institute and the U.S. Chamber's Institute for Legal Reform reports that US tort costs reached 2.15% of GDP in 2023 and grew 7.05% a year from 2014 to 2023, against 4.63% GDP growth and 2.60% inflation, and defines a nuclear verdict as one of $10 million or more. These are advocacy figures from one side of a policy debate, and the reserve development is the number that isn't: Everest's $657 million is what social inflation cost one company in one year, as recognized in its accounts. ## How to Build It These are deltas against [The Core Data Model](https://www.syntaqx.com/books/insurance/insurance-business#the-core-data-model): `claims`, `exposures`, `reserves` (DCC), `claim_payments`, `documents` and `claim_tasks`. This chapter adds `demands`, `litigation_matters` and `legal_invoices`. ```sql CREATE TABLE demands ( -- settlement demands, CRNs and presuit notices id UUID PRIMARY KEY DEFAULT uuidv7(), exposure_id UUID NOT NULL REFERENCES exposures (id), kind TEXT NOT NULL CHECK (kind IN ('time_limited', 'policy_limits', 'settlement', 'civil_remedy_notice', 'presuit_notice')), from_party_id UUID NOT NULL REFERENCES parties (id), -- claimant or counsel amount BIGINT, within_limits BOOLEAN, transmitted_at TIMESTAMPTZ NOT NULL, transmission TEXT NOT NULL CHECK (transmission IN ('email', 'fax', 'certified_mail', 'regular_mail', 'overnight', 'hand', 'portal')), received_at TIMESTAMPTZ NOT NULL, rule_ref TEXT, -- 'Cal. Civ. Proc. Code 999.1', 'O.C.G.A. 9-11-67.1', -- 'Fla. Stat. 624.155(3)', 'Tex. Ins. Code 542A.003' compliant BOOLEAN, -- meets the statute's content rules noncompliance TEXT[], -- missing label, records, release terms, ... expires_at TIMESTAMPTZ, -- computed from the rule and transmission safe_harbor_at TIMESTAMPTZ, -- FL: 90 days after actual notice evaluation_document_id UUID, -- liability, damages, excess exposure, written response TEXT CHECK (response IN ('accepted', 'rejected', 'clarification', 'counteroffer', 'tendered', 'interpleader', 'cured')), response_document_id UUID, responded_at TIMESTAMPTZ ); CREATE TABLE litigation_matters ( -- a suit, arbitration or appraisal in court id UUID PRIMARY KEY DEFAULT uuidv7(), claim_id UUID NOT NULL REFERENCES claims (id), exposure_ids UUID[] NOT NULL, kind TEXT NOT NULL CHECK (kind IN ('defense', 'coverage', 'first_party', 'bad_faith', 'subrogation', 'declaratory')), court TEXT, docket_number TEXT, served_at TIMESTAMPTZ, defense_counsel_party_id UUID REFERENCES parties (id), coverage_counsel_party_id UUID REFERENCES parties (id), budget BIGINT, excess_exposure BOOLEAN NOT NULL DEFAULT FALSE, -- possible verdict above limits excess_letter_document_id UUID, -- notice to the insured of excess exposure trial_date DATE, outcome TEXT, -- 'settled', 'verdict', 'dismissed', ... outcome_amount BIGINT, closed_at TIMESTAMPTZ ); CREATE TABLE legal_invoices ( -- LEDES files, line by line id UUID PRIMARY KEY DEFAULT uuidv7(), matter_id UUID NOT NULL REFERENCES litigation_matters (id), firm_party_id UUID NOT NULL REFERENCES parties (id), format TEXT NOT NULL, -- 'LEDES98B', 'LEDES XML 2.2' period_start DATE NOT NULL, period_end DATE NOT NULL, lines JSONB NOT NULL, -- UTBMS phase, task, activity, expense code, -- timekeeper, hours, rate, amount billed_amount BIGINT NOT NULL, adjustments JSONB NOT NULL DEFAULT '[]', -- guideline rule, line, reduction approved_amount BIGINT, claim_payment_id UUID REFERENCES claim_payments (id) -- paid as DCC ); ``` A demand creates tasks the moment it is received: evaluate by a date well before expiry, respond by expiry, and, in Florida, the 90-day safe harbor date. A demand's deadline is computed from its rule and transmission method and never typed; a demand whose compliance is uncertain is treated as compliant for scheduling. A bad faith matter links back to every claim event that will be evidence, which in a system built as the earlier chapters describe is the claim's own history. Design choices: - **Demands are first-class records** with transmission method, content compliance and a computed expiry, for every state's rule. - **The evaluation is a document written before the deadline,** attached to the demand. - **Excess exposure is a flag that changes handling:** reserve review, senior authority, a letter to the insured, reinsurer notice. - **Legal invoices are coded lines,** reviewed by rules, and paid as DCC on the exposure. ## Auditing - **Every demand** with transmission, receipt, compliance assessment, computed expiry, evaluation and response, and every lapse. - **Every civil remedy notice and presuit notice** with its cure or response by the statutory date. - **Every matter** with counsel, budget, excess exposure, letters to the insured, outcome and total DCC. - **Every legal invoice** with its lines, guideline adjustments and payment. - **Florida claims split by policy issue date** around March 24, 2023, because fee shifting and bad faith rules differ on either side. ## What This Means for the System You Build - **Record demands as dated events with computed expiries** under California's, Georgia's and Florida's rules, from the transmission method. - **Evaluate in writing before the deadline,** and respond with reasons where the state requires. - **Track statutory notices** (Texas 61 days, Washington 20, Florida 60) as tasks with cure windows. - **Flag excess exposure** and change authority, reserves and insured communications when it is set. - **Take coded legal invoices** and apply guideline rules line by line. - **Keep the claim history complete,** because in a bad faith case it is the evidence. ## References **Law and regulation** - [Tex. Ins. Code 541.060](https://texas.public.law/statutes/tex._ins._code_section_541.060), unfair settlement practices: good faith settlement when liability is reasonably clear and reasonable investigation - [Tex. Ins. Code 541.152](https://texas.public.law/statutes/tex._ins._code_section_541.152), actual damages, fees and up to three times actual damages for knowing conduct - [Tex. Ins. Code 542A.003](https://texas.public.law/statutes/tex._ins._code_section_542A.003), presuit notice at least 61 days before suit, effective September 1, 2017 - [Tex. Ins. Code 542A.007](https://texas.public.law/statutes/tex._ins._code_section_542A.007), attorney's fees scaled by the ratio of judgment to demand - [RCW 48.30.015](https://app.leg.wa.gov/RCW/default.aspx?cite=48.30.015), the Insurance Fair Conduct Act: treble damages, fees, 20-day notice and its 2007 referendum - [Fla. Stat. 624.155](http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0624/Sections/0624.155.html), civil remedy notices, the 90-day safe harbor, mere negligence, claimant duties and multiple claimants, as amended by ch. 2023-15 - [Laws of Florida ch. 2023-15 (HB 837) (PDF)](http://laws.flrules.org/2023/15), approval and effective date, bad faith changes, repeal of 627.428, the two-year limitation period, comparative fault, medical damages evidence and application dates - [Fla. Stat. 768.81](http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0768/Sections/0768.81.html), no recovery above 50% fault - [Cal. Civ. Proc. Code 999.1 (FindLaw)](https://codes.findlaw.com/ca/code-of-civil-procedure/ccp-sect-999-1/), time-limited demand form, contents and 30 or 33 day minimums - [Cal. Civ. Proc. Code 999.3 (FindLaw)](https://codes.findlaw.com/ca/code-of-civil-procedure/ccp-sect-999-3/), acceptance, clarification and written reasons for not accepting - [Cal. Civ. Proc. Code 999.4 (FindLaw)](https://codes.findlaw.com/ca/code-of-civil-procedure/ccp-sect-999-4/), noncompliant demands not reasonable offers in later suits - [Cal. Civ. Proc. Code 999.5 (FindLaw)](https://codes.findlaw.com/ca/code-of-civil-procedure/ccp-sect-999-5/), covered policies and demands transmitted on or after January 1, 2023 - [O.C.G.A. 9-11-67.1 (FindLaw)](https://codes.findlaw.com/ga/title-9-civil-practice/ga-code-sect-9-11-67-1/), Georgia's pre-answer motor vehicle settlement offers: 30 days from receipt, delivery, contents, 40-day payment and clarification **Courts** - [Gruenberg v. Aetna Ins. Co., 9 Cal. 3d 566 (1973)](https://static.case.law/cal-3d/9/cases/0566-01.json), first-party bad faith in tort - [Crisci v. Security Ins. Co., 66 Cal. 2d 425 (1967)](https://static.case.law/cal-2d/66/cases/0425-01.json), the prudent insurer without policy limits test and its facts - [G. A. Stowers Furniture Co. v. American Indemnity Co., 15 S.W.2d 544 (Tex. Comm'n App. 1929)](https://static.case.law/sw2d/15/cases/0544-01.json), the ordinary prudence duty to settle and its facts - [Universe Life Ins. Co. v. Giles, 950 S.W.2d 48 (Tex. 1997)](https://static.case.law/sw2d/950/cases/0048-01.json), Texas's first-party standard - [Texas Mutual Ins. Co. v. Ruttiger, 381 S.W.3d 430 (Tex. 2012)](https://static.case.law/sw3d/381/cases/0430-01.json), no common-law or Insurance Code bad faith claims against workers' compensation carriers - [USAA Texas Lloyds Co. v. Menchaca, 545 S.W.3d 479 (Tex. 2018)](https://static.case.law/sw3d/545/cases/0479-01.json), the five rules on policy benefits and statutory damages - [State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003)](https://www.law.cornell.edu/supct/html/01-1289.ZO.html), the single-digit ratio and the $145 million award **Regulators and guidance** - [Florida Office of Insurance Regulation: Property Insurance Stability Report, July 1, 2026 (PDF)](http://floir.gov/docs-sf/default-source/property-and-casualty/stability-unit-reports/july-2026-isu-report.pdf), Florida's shares of US homeowners claims and suits 2019-2025, service-of-process declines and DCC per claim - [Florida Office of Insurance Regulation: Property and Casualty Closed Claims Litigation Report, January 2024 (PDF)](http://floir.gov/docs-sf/default-source/property-and-casualty/other-property-casualty-reports/january-2024-pclr.pdf), 2022 closed and litigated claims and average LAE - [Florida Office of Insurance Regulation: Market overview](https://floir.gov/property-casualty/market-overview), new insurers approved since the reforms **Standards** - [UTBMS](https://utbms.com/) and [ABA litigation code set](https://utbms.com/aba-litigation-codes/), the code sets and their origin - [LEDES](https://ledes.org/), electronic legal billing formats and the oversight committee **Filings** - [CNA: Form 10-K for 2025](https://www.sec.gov/Archives/edgar/data/21175/000002117526000011/cna-20251231.htm), social inflation, reviver statutes and litigation financing - [Everest Group: Form 10-K for 2025](https://www.sec.gov/Archives/edgar/data/1095073/000109507326000006/eg-20251231.htm), social inflation factors and the $657 million reserve increase - [W. R. Berkley: Form 10-K for 2025](https://www.sec.gov/Archives/edgar/data/11544/000001154426000005/wrb-20251231.htm), loss costs driven by social inflation - [Markel: Form 10-K for 2025](https://www.sec.gov/Archives/edgar/data/1096343/000109634326000020/mkl-20251231.htm), litigation funding, social inflation and adverse verdicts **In practice** - [Insurance Information Institute: US leads in tort cost growth (October 26, 2026)](https://www.iii.org/blog/u-s-leads-in-tort-cost-growth-but-u-k-is-closing-the-gap), tort costs as a share of GDP, growth rates and the nuclear verdict threshold --- Canonical URL: https://www.syntaqx.com/books/insurance/bad-faith-and-litigation