Social inflation is at the heart of rising claims severity trends showing up on the books of casualty insurers and reinsurers, industry representatives agree.
Executive Summary
Carrier and reinsurance executives offered a host of commonsense ideas for cutting down liability loss costs that have been mounting in recent years. Spend more, settle early, stick together and be smart, four told Carrier Management recently during separate interviews focused on suggested claims department activities and reconsideration of cost-cutting moves that might be contributing to adverse trends.“But it’s not the only reason why we’re in the spot that we’re in right now,” Rich Henderson, senior vice president of TransRe, told Carrier Management recently, referring to some budget-conscious activities across carrier claims departments that may be hindering the ability to counter a well-coordinated plaintiffs bar.
“I do absolutely believe social inflation is there….There’s no question. But we also can’t make it be the scapegoat and catchall for all poor results,” he said. “There are many decisions made which can adversely impact results, whether from the claim or underwriting perspectives, and we have to be careful to understand where those end and where social inflation begins.”
