For immediate release
New York Press Office: Michael Barry, 917-923-8245, email@example.com
NEW YORK, March 21, 2022—Sean Kevelighan, CEO, Insurance Information Institute (Triple-I) and Dale Porfilio, Chief Insurance Officer, Triple-I, are speaking at separate events this week to explain how rising litigation costs are adversely impacting insurance markets.
Joining Kevelighan on an American Tort Reform Association (ATRA) panel to discuss Nuclear Verdicts on Tuesday, March 22, will be Richard Pianka, General Counsel and Executive Vice President for Legal Affairs, American Trucking Associations. Matthew Fullenbaum, Director of Legislation, ATRA, is the session’s moderator. It is being held during an ATRA membership meeting at The Capital Hilton in Washington, D.C.
Nuclear verdicts are generally defined as jury awards which exceed $10 million.
“Paying claims is perhaps the most imperative facet of insurance, as it’s what safeguards that promises made are kept,” Kevelighan stated. “However, as we see more and more actions to inflate claims though the likes of runaway litigation and nuclear verdicts being fueled by greedy plaintiff attorneys and even non-associated third-party funders, there is less ability to accurately underwrite the risk – forcing insurers to re-think being part of certain lines of business, such as commercial auto and general liability. Commercial auto alone has seen attorney involvement in claims more than double in the last five years. Social inflation is real and it’s taking a toll on an industry dedicated to being financial first responders.”
Social inflation Is the term commonly used to describe the impact of rising litigation on insurers’ costs.
Social inflation’s negative influence on multiple insurance lines were examined in a Triple-I paper developed in partnership with the Casualty Actuarial Society in February 2022. Higher claim costs tend to be passed along to policyholders in the form of higher premiums.
Despite reductions in insurance coverage, rising deductibles, and improved safety, almost all motor carriers experienced substantial increases in insurance costs from 2018 to 2020, according to the American Transportation Research Institute (ATRI). ATRI released last month its own report on how the trucking industry is seeing its cost of doing business soar in part due to the rising cost of insurance.
Porfilio, who also serves as the Insurance Research Council’s (IRC) president, will discuss Social Inflation: From Research to Actions on Wednesday, March 23, as part of the Claims and Litigation Management (CLM) Alliance’s annual conference at the JW Marriott in Palm Desert, Calif. Porfilio’s audience will consist primarily of insurance industry Chief Claims Officers.
“Lawsuits should be pursued only as a last resort, yet the exponential growth of personal injury attorney advertising, third-party litigation funding investments, and securities class actions are driving costlier jury verdicts,” Porfilio stated. “These trends are driving up the cost of insurance, which then increases the costs of goods and services.”
Funding of lawsuits by hedge funds and other financial third parties—who have no stake in the outcome other than a share of the settlement—has become a multi-billion dollar industry, a panel at Triple-I’s Joint Industry Forum in December 2021 noted.
Triple-I, IRC, and CLM are affiliates of The Institutes.
Video: Social Inflation
Issue Brief: Triple-I State of the Risk: Social Inflation