Brother-sister duo develops software to alert insurers to nuclear verdicts

With nuclear verdicts on an “alarming” rise throughout the United States, an insurtech CEO and her trial lawyer brother have teamed up to develop a new AI-powered solution.

Denise Tyson is the founder and CEO of Schaefer City Technologies LLC. She and her brother Bob Tyson, founding partner, Tyson & Mendes LLP, have developed NaVeL, a product that aims to flag potential nuclear verdicts in advance. A nuclear verdict is a jury award in favor of the plaintiff that exceeds $10 million. These verdicts can impact a company's reputation and are a potential driver of social inflation, which can cause premiums to skyrocket.

“Our main product is called NaVeL, which stands for nuclear verdict exposure likelihood. It identifies the attributes in a live claim file and then alerts the adjuster, ‘Hey, something’s going on. You might want to look at this. You might want to do something differently,’” Denise said.

Both Tyson siblings believe insurers can leverage big data, AI and advanced algorithms to help identify patterns in nuclear verdicts and better avoid them. But, they said, the challenge has been that insurance companies have not shared this data with each other — until now.

“A company like ours, with their permission, can pool everybody’s data together and then share the benefits of that data and those patterns back to our clients,” Denise said.

The main point, she added, is for insurers to consider new information they haven’t had before and take different action to avoid extreme legal losses.

“If you don’t do anything different than you’ve ever done before, and you continue to take these to trial and don’t make any other changes, you’re going to get hit. It’s just the pattern,” she said.

Data-driven strategies

Denise’s 30 years of insurance industry experience and Bob’s 35 years of legal experience have been leveraged in the development of Schaefer City Technology’s NaVel software. Its “secret sauce” for flagging potential nuclear verdicts involves using AI models that have been carefully trained on the combined input from teams of legal experts, insurance experts, tech experts, data scientists and engineers.

“Insurance has always been an industry of a lot of data, a lot of information and, believe it or not, a lot of technology. But it’s always been not shared. So, it really comes down to the sharing of information, the sharing of knowledge, that’s going to stop this from happening,” Denise said.

NaVel’s advanced algorithm assesses live claims and ranks them on a scale from one to 10. Its color-coded system tags claims as red, yellow or green, from most to least likely to result in a nuclear verdict.

Denise explained that the system does not look at personal data such as the claimant’s name or address, but instead considers factors such as policy type, accident or injury claim details, and whether the claimant has a lawyer.

“We pull out those attributes, run them through our algorithm and then send you back a score. If it comes back and it’s red — so, seven or higher — that means you need to do something now. Do not go to trial with this. Try to settle. Try to get engaged with the other party. Do something different,” Denise said.

The company is also working on a new product, Big Blue, that aims to help insurers avoid nuclear verdicts after a claim has already gone into litigation.

Meanwhile, Bob is focused on helping avoid nuclear verdicts from a legal perspective. He has already published one book detailing legal defense strategies, and has another in the pipeline.

Leveraging AI to flag nuclear verdicts

Bob explained that NaVel uses AI because of the large amount of data it analyzes, and because the typical attributes insurers looked for in the past are changing.

“The normal things we look for, like jurisdiction — is it one of the judicial hellholes? Well, all of America now is becoming a judicial hellhole. You’re seeing nuclear verdicts in conservative areas, farming areas, the Midwest, where you’ve never seen it before,” he said.

There are too many factors for an experienced insurance professional to be able to spot without the use of targeted AI, he added.

“You need assistance, and it’s a resource that I know a lot of insurance companies have been asking for. I think it’s imperative that insurance companies use AI to look at their own data and industry data to spot these trends, to be able to spot a nuclear verdict,” Bob said.

A different course of action

Both Tysons urged American insurers to adopt different strategies if they are to adapt to the changing culture of nuclear verdicts.

“Nuclear verdicts are happening to the most experienced and to the best defense lawyers in America, which is very concerning. What that means is that the old ways aren’t working,” Bob said.

He noted that insurance companies “really struggle with change,” but that it’s necessary for the nuclear verdict trend to be reversed.

“You have to change the way you try lawsuits. If we can change this, we can stop nuclear verdicts, and we can do it,” Bob said.

Schaefer City Technologies is an insurance software development company based in San Diego, Calif. It was founded in 2022 for the specific purpose of helping insurers stop nuclear verdicts.

Tyson & Mendes, LLP, is an American law firm founded in 2002 based in San Diego, California. It has over two dozen offices in more than 20 states.

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