January 29, 2020

Responses to The Council’s Commercial Property/Casualty Market Index survey illustrate an increasing awareness of the impacts of social inflation, ultimately leading to increases in commercial premium pricing, more expensive claims, and increased litigation costs. These effects have been particularly prevalent in two commercial lines: commercial auto and directors & officers insurance (D&O).

Social inflation looks to be just one more contributor to rising commercial auto prices, which have seen over 30 quarters of premium increases according to The Council’s research. But when it comes to D&O, social inflation’s influence may be more significant. Respondents to the identified social inflation as a possible reason for recent price increases in D&O, and the relative size of these increases suggest D&O is being pulled into the hard market along with some other major commercial lines.

So what’s the deal with social inflation?