PartnerRe said in a 2010 white paper that social inflation is the increase in insurance losses caused by higher jury awards; more liberal treatment of claims by workers' compensation boards; and increased use of social media, among several other factors. (Credit: syahrir/Adobe Stock)
The scourge of legal abuse in insurance is hardly new or even recent but rather has been insidiously growing throughout the industry for decades. Referred to today as social inflation, the stakes are higher and so-called "tort reform" seems elusive.
Related: The three-headed monster threatening insurance
Some 86% of Americans agree that state and federal lawmakers should address the abuses of the U.S. legal system, according to a study conducted by the American Property Casualty Insurance Association (APCIA) and Munich Reinsurance America, Inc. (Munich Re U.S.). The insurance industry can no longer rely on current strategies and responses to this threat, nor can it continue to absorb and pass along the associated costs to policyholders.
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