The Expanding Role Of Coverage Counsel In Combating Social Inflation

Social inflation remains a top challenge facing insurers in the realm of claims. Social inflation is, at its core, a shift in societal mentality; and is often driven by generational perceptions of fairness, including how jurors view litigants and their ability to absorb the attendant risk and cost of litigation.

With a changing demographic (jurors) motivated and informed by new experiences, access to information, and evolving views on social and economic matters, the potential for nuclear verdicts driven by social inflation continues to impact the foundation of litigation and, consequently, claims.

Generally, social inflation is explained as the rise in claim costs to an insurer above the typical economic inflation.

Specifically, social inflation is comprised of changes in legal liabilities and claims costs, including new and expansive tort and negligence concepts, increased litigation frequency, and larger jury awards that appear to be driven by society’s increasing desensitization to large verdicts and settlements.

While understanding and trying to get ahead of these societal trends to curb rising insurance claims costs can be difficult, insurers can look to their claims and litigation partners to help navigate social inflation effects.

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