Analysis Reveals Legal System Misuse, Alongside Economic Inflation, Contributes to Over $230 Billion in Liability Insurance Losses in the Last Decade, According to New Triple-I – Casualty Actuary Society Report

Legal System Abuse Impact: A new analysis reveals that legal system abuse and litigation trends have contributed to an increase in liability insurance losses, estimated between $231.6 billion and $281.2 billion over the past decade, significantly surpassing inflation rates.

Claim Severity vs. Frequency: The report indicates that the escalation in insurance losses is driven by the severity of claims rather than their frequency, with average claim costs rising dramatically despite a decline in the number of claims.

Social Inflation and Legal Trends: Previous research links social inflation, characterized by rising claim costs due to litigation behaviors and large jury awards, to the increase in liability insurance losses, with approximately one-third of auto liability loss inflation attributed to legal system abuse.

Broader Implications for Insurers: The findings suggest that ongoing inflationary losses from legal system abuse will lead to higher premiums and increased financial strain on insurers, emphasizing the need to address these issues to protect consumers and manage costs effectively.