Social Inflation
Key Takeaway
The trend of increasing insurance losses driven by broader societal factors including more plaintiff-friendly jury attitudes, litigation funding, expanding legal theories of liability, and larger jury awards. Social inflation is distinct from economic inflation and is a major driver of rising legal malpractice insurance premiums across the market..
Definition
The trend of increasing insurance losses driven by broader societal factors including more plaintiff-friendly jury attitudes, litigation funding, expanding legal theories of liability, and larger jury awards. Social inflation is distinct from economic inflation and is a major driver of rising legal malpractice insurance premiums across the market.
Why This Matters for Law Firms
Underwriting terms determine what you pay for coverage and what terms you receive. Law firms that understand the underwriting process can present their risk profile more effectively, negotiate better terms, and avoid surprises at renewal. This knowledge is particularly valuable when shopping for new coverage or responding to carrier questions.
Example Usage in Context
A firm preparing for its annual insurance renewal might encounter this in the carrier's proposal: "The underwriter has adjusted our social inflation based on our claims history. Let's discuss with our broker whether we can improve this at our next renewal."
Related Q&A
Related terms
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