Judgment preservation insurance

A trial judgment can award a company hundreds of millions of dollars, in patent, antitrust or contract cases. But the appeal process takes years, and the judgment may be reversed or sharply reduced. The winning company thus holds an uncertain asset that it can neither fully book nor easily monetize. Judgment preservation insurance turns this uncertainty into partial certainty: for a premium, often around ten percent or more of the guaranteed amount, the insurer undertakes to pay an agreed sum if the judgment is overturned on appeal. The product grew rapidly in the early 2020s in the United States, driven by litigation finance, and lets the insured borrow against the judgment or refuse a discounted settlement. It then suffered heavy losses when appeals courts overturned several exceptionally large patent judgments, showing that the legal assessment of appeal risk is more fragile than models assumed, and that exposures were concentrated on a few cases. The market has since shrunk and hardened. For the analyst, it is an example of legal risk turned into an insurance product, in which the underwriter must assess not a natural hazard but the likely reasoning of judges.