Casualty Claims Severity Significantly Outpacing Economic Inflation

商用车索赔费用, 职业责任, product liability and directors and officers liability insurance have exceeded economic inflation over the last decade, 社会通货膨胀可能是罪魁祸首, 根据AM Best的最新数据.

Social inflation has been a “thorn in the side of casualty insurers” for some time, with loss severity rising at double the pace of economic inflation. For example, the average loss severity increase from 2013-2023 for product liability was 20.4%, while average annual economic inflation was 2.7%.

“The ‘social’ part of the term refers to shifting social and cultural attitudes about who is responsible for absorbing risk (the insurer or the plaintiff), which makes social inflation tough to quantify—and makes it even more difficult for insurers to predict and mitigate its impact,AM Best在其报告中表示. “随着社会动态的不断发展, navigating the complexities of social inflation will remain a challenge for the insurance industry.” For excess liability and umbrella coverage, loss severity increased by an average of 11.过去十年增长了1%.

“The rise is not just a one-year phenomenon—loss severity has been rising for 10 years,公司说, noting that social inflation has been the largest cause of adverse loss development over the last decade. While economic inflation can typically be assessed based on historical data, it is measured with a range of values by economists. 社会通货膨胀的情况并非如此. 当核判决被判时, 它不仅影响一个索赔, 还有所有其他公开声明, 作为原告(在律师的指导下), 寻求类似的判决或和解, rendering an insurer’s existing reserves inadequate,贝斯特先生说。.

AM Best also attributed some of the rise in claims costs to more attorney involvement in commercial lines, with the COVID-19 pandemic a “catalyst” for more legal activity. The American Tort Reform Association has reported that between March 2020 and December 2020, 超过176个,000 television ads for legal services mentioning COVID-19 had aired in the U.S. By February 2021, at least 8,200 lawsuits tied to the pandemic were filed.

With lawsuits comes third-party litigation funding, a factor that has complicated the situation. “Insurers have been challenged to use pricing models to mitigate legal costs arising from the growing number of outsized jury awards or owing to legal proceedings that are taking longer than expected to be resolved,贝斯特先生说。. The firm noted that it would be analyzing how insurers demonstrate their understanding of the exposures in their portfolios and efforts to limit large losses.

AM Best’s research came out just after Moody’s Ratings issued a report on social inflation that predicted the phenomenon would press property/casualty insurers to keep raising prices. “我们预计社会通胀将继续, and insurers to respond by building higher expected losses into their policies, 提高价格，增加储备,贾斯帕·库珀说, 非洲金融共同体, VP, and senior credit officer at Moody’s Ratings.

穆迪强调，P&保险公司的准备金投放有所下降, with companies strengthening reserves particularly in commercial auto and general liability for accident years 2015-2019.

“Commercial auto liability losses have more than doubled in the last decade, 穆迪发现, noting that the effects of social inflation may be hitting harder now.”

“Social inflation tends to hit personal auto first since claims tend to be more numerous, 体积更小，沉降更快. The same factors that cause personal auto claims to increase tend to take longer to play out in longer-tail lines such as commercial auto and general liability,公司说, 添加, “Some insurers have been slower to raise rates and boost reserve assumptions because commercial auto is often written as part of a package with more profitable lines.”

Moody’s said it saw “modest reserve deficiency” in long-tail lines of insurance. These have partially been offset by reserve redundancies in other lines.

“We expect that insurers will continue to report favorable development for short-tail lines and workers’ compensation, helping to offset adverse development for commercial auto and general liability,穆迪说。.

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