Juries share a common view that defendants can pay out larger sums of money to a plaintiff. Much of this is based around daily exposure to larger sum verdicts in the media, further desensitizing the public and making it appear more common and acceptable. (Photo: niroworld/Shutterstock)
Social inflation is a term you frequently hear in risk management these days. It refers to the phenomenon of a general anti-establishment sentiment that exists publicly today, which has a far-reaching impact on businesses and the insurance industry as a whole. Last year, "Out Front Ideas with Kimberly and Mark" discussed the impacts of social inflation with a panel of experts. Our guests were:
- Mark Bennett, vice president of large casualty claims at Safety National
- Oliver Krejs, partner at Taylor Anderson
- Aref Jabbour, senior consultant at Trial Behavior Consulting
- Andrew Pauley, government affairs counsel at the National Association of Mutual Insurance Companies (NAMIC)
Jury trials
While only 5% of lawsuits ever result in a jury trial, knowing the potential outcome for a defendant shapes the future of underwriting and pricing risks in the industry. Because of its impact on rising costs, it is critical to explore what is causing the public to shift sympathy in support of the plaintiff.
Over the last five-to-six years, we have seen a steady increase in awards given by juries. We have also witnessed an overall increase in the number of cases going to trial, especially in cases valued at up to a million dollars. So what is happening with liability juries to drive these large reports? One of our experts breaks down the major areas of concern.
- The perception of the value of money has changed since the financial crisis. Juries share a common view that defendants can pay out larger sums of money to a plaintiff. Much of this is based around our daily exposure to larger sum verdicts in the media, further desensitizing the public and making it appear more common and acceptable. Juries also believe defendants should still pay out a verdict even if there is substantial evidence they were not at fault because the plaintiff deserves compensation.
- Media outlets and social media are impacting public opinion. Anyone with a social media account can attest that ideas are more extreme and less filtered than what someone would be willing to express in person. Since these ideas are more-commonly expressed, it tends to validate the public's ideas or thoughts, making it harder to change their minds. For example, we are seeing an increase in jury awards against police officers, even in cases where the evidence supports that the officer acted appropriately. There is a true struggle to overcome these types of societal prejudices as media-based opinions become more prolific.
Bad faith, litigation financing and other challenges
The litigation environment is ever-changing due to the effects of social inflation, not only state-wide but also at the national level. Expansion of bad faith, litigation financing, and the statute of limitations are just a few of the challenges facing insurers today. One of our guests summarized these issues and cases where we are seeing problematic outcomes that continue to gain traction with changing public opinion.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
