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Social Inflation Insight

COVID-19 in The Courtrooms

Good morning,
 
There’s no denying it. The COVID-19 pandemic has had an impact across all parts of society. As we take a closer look at the topic of social inflation, we can’t help but wonder what effect the pandemic has had on the phenomenon. AmTrust Excess and Surplus (E&S) Division SVP Erich Bublitz explored this question in his recent column for Risk & Insurance. The publication, like the Insurance Information Institute (Triple-I), is an affiliate of The Institutes.
 
We’ve previously covered in Social Inflation Insight how social inflation is driven by a wide variety of contributing factors, including runaway litigation, nuclear verdicts, rollbacks of tort reforms, and third-party litigation funding.
 
Bublitz explains that the pandemic accelerated certain underlying drivers for social inflation and “made the claims landscape even more challenging and expensive for insurers.”
 
“Corporate mistrust and a growing animosity for large institutions increased during the past two years, especially towards companies that profited during the pandemic. It remains to be seen if these trends will translate into even larger nuclear verdicts.”
 
What Impact Will This Have on Claims?
 
Per Bublitz, general liability has already begun to see the pandemic’s impact, but he expects it will expand to “almost every liability segment including professional, D&O, EPLI and cyber insurance.”
 
Bublitz also expects the healthcare and tourism industries to see a rise in litigation when the pandemic ends. To put that in perspective, there are already 4,000 EPLI cases or claims already awaiting court dates or completion. 
 
Since legal procedures are likely to be lengthy and delay settlements, Bublitz predicts that liability claims related to the pandemic will be spread out over several years rather than several quarters.
 
Time will only tell how significantly this will exacerbate social inflation in the long term.

To learn more, visit iii.org/socialinflation
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