Media Coverage
Source: InsuranceERM
Media Coverage
Press Contacts: Erik Cummins, Matt Hyams, Olivia Thomas
11.29.23
In 1977, in a letter to shareholders arguing for an increase in insurance rates, Warren Buffett described “social inflation” as “a broadening definition by society and juries of what is covered by insurance policies.”
Close to 50 years later, while some in the insurance industry have posited “social inflation” as the driver of rising insurance rates, Insurance Recovery & Advisory partner Benajmin Tievsky expressed skepticism.
In a Q&A with InsuranceERM, Tievsky said, “…as I understand it, the basic theory of social inflation is that insurers' claims costs are disproportionately increased by certain alleged litigation trends—including increased use of litigation funding, attorney advertising, plaintiff-friendly legislation, the proliferation of “nuclear” jury verdicts, anti-corporate and anti-insurer mindset—and that these increased claims costs are supposed justification for raising premium rates.”
Yet, “…there does not seem to be much actual data supporting a correlation between these factors—assuming they actually exist—and the insurance industry’s claims costs and premium pricing,” he said.
He added that some analysts “go so far as to say the insurance industry has essentially invented the concept of social inflation as a justification for raising rates.”
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