Social inflation: a building pain point in US liability insurance

Social inflation is pushing US liability loss costs up, and the pain is spreading from commercial auto to general liability, D&O and medical malpractice. The higher premium rates of so far may not be enough to offset the loss trends, warranting a watchful eye.

Key takeaways

• The benign US P&C loss cost environment of the past decade appears to be turning.
• An increasingly involved and better funded plaintiff bar, and sharply rising jury awards, are pushing up the "social inflation" component of loss costs in US liability.
• This is most evident in commercial auto with adverse reserve development and rising premium rates for a number of year.
• The stress is now spreading to other liability lines.
• Premium rates are firming, but this may not be enough to offset escalating loss costs.
• Further potential pain points from opioid litigation and reviver statutes lie ahead.

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