Property and casualty insurance executives are waving red flags about litigation funding, which they believe is the primary driver for the biggest emerging risk they’re facing — social inflation.Litigation
“I would bold and underline that,” Matt Wolfe, president of Aon Reinsurance Solutions Canada, said during an Insurance Institute of Ontario webinar in September. “[Social inflation] is, I think, the Number 1 topic of discussion, typically in the U.S. insurance market.”
Social inflation describes the rise of insurance claims costs because of increased legal costs.
Litigation is increasingly expensive for a variety of reasons; among them, more litigation, more plaintiff-friendly judgments, or higher jury awards. Wolfe uses the example of an auto insurance loss that used to settle for $2 million now settles for upwards of $8 million.