Punitive damages are not a big concern for insurance companies because they are rare and mostly limited to the U.S. Only about 6% of successful claims result in punitive damages, which are often for intentional acts not covered by insurance. Settlements, not verdicts, are the norm in court cases, and many states in the U.S. don't allow insurance for punitive damages. Fear of punitive damages leads to higher settlements, not actual costly awards for insurers.