Triple-I, CAS Quantify Social Inflation’s Impact On Commercial Auto

The phenomenon known as ‘social inflation’ accounted for $20 billion in commercial auto liability claims between 2010 and 2019, a new study by Triple-I and the Casualty Actuarial Society (CAS) finds.

Social inflation isn’t a new term. Warren Buffett used it in the 1970s to describe ‘a broadening definition by society and juries of what is covered by insurance policies.’

It has since become common parlance among insurers and risk managers for a range of factors causing losses in certain lines to rise faster than general inflation would predict. These include:

Class-action lawsuits;
Growing awards from sympathetic juries;
Third-party litigation funding, in which investors finance lawsuits against large companies in return for a share in the settlement; and
Rollbacks of tort reforms that were intended to control costs in the wake of the 1980s ‘liability crisis’.