US social inflation amid the COVID-19 recession – here to stay?
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We expect the COVID-19 recession to aggravate trends such as inequality that underlie the growth of social inflation in US commercial liability claims. A policy reset towards societal inclusion is needed.
Key takeaways:
- Social inflation in the US is driven primarily by outsized awards for non-economic damages.
- Disinflationary forces from the COVID-19 recession will provide temporary relief, but the crisis is aggravating trends like inequality.
- A policy reset that prioritises inclusion and equality could reverse some of the underlying trends contributing to social inflation.
- The insurance industry may benefit from more focus on forward-looking liability exposure management and product innovation, as well as adapting their defence strategies.
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