Chubb: Social Inflation

“Social inflation” is a term that describes how claims costs are increasing above general economic inflation.  The “social” aspect of the term represents shifting societal and cultural attitudes about who is responsible for absorbing risk (the insurer or the plaintiff). The varying demographic makeup of jury pools, an increasing public distrust of large corporations and high net worth individuals, and the influences of social media and legal marketing can all influence jury verdicts and awards.  Nuclear verdicts, generally defined as jury verdicts exceeding $10 million in punitive and compensatory awards, are one of the largest contributors to social inflation.