Social Inflation: A Claims Perspective

Social inflation is seemingly being discussed everywhere, from news articles to conferences to quarterly earnings calls. And those working in claims are likely dealing with it in some capacity on a daily basis. But what can be done to combat it?

In simple terms, social inflation is the increase in defendants’/insurers’ claim costs over and above general economic inflation. It is not a new phenomenon.

Social inflation occurred in the 1980s, manifesting in the swarm of asbestos and environmental claims/liabilities, and again in the late 1990s/early 2000s in connection with medical malpractice developments.

Moreover, social inflation is not unique to the U.S.; it affects economies across the globe. Class action filings have increased, nuclear verdicts are on the rise and large settlements are becoming more commonplace.