MARINE | Claims trends In association with American P&I Club
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Social Inflation: Fact or Fiction?
Molly McCafferty, Senior Vice President, Regional Claims Director (Americas), Shipowners Claims Bureau, Inc., Managers American P&I Club, asks whether social inflation is really driving claims trends. She concludes that it is and that the insurance sector needs to better understand the underlying causes and seek effective solutions to this worrying phenomenon Social inflation has become a trendy term in the insurance industry used to explain the rising cost of insurance claims, particularly personal injury claims. According to a recent study by the Geneva Association on the topic, the Insurance Information Institute (III) considers the term “social inflation” to broadly “refer to all ways in which insurers’ claims costs rise over and above general economic inflation.” A focused approach taken from the same study suggests that “social inflation refers to legislative and litigation
developments which impact insurers’ legal liabilities and claims costs.” It is a catch all phrase that includes everything from the impact of social media, societal shifts like politics, interpretation of law, legal precedent, public sentiment and victimization to science and technology breakthroughs as they apply to medical treatment.
ESCALATING COSTS
In the last year, industry colleagues have raised the caution flag on the escalating cost of personal injury claims in the The Marine Insurer | March 2022
