Partners Alan Russo and Marie Castronuovo joined AM Best’s John Czuba on Best’s November podcast. Alan and Marie talked about how social inflation is changing liability insurance, and how liability insurers and defense attorneys can combat tactics to reduce claim settlements.

Social inflation refers to the rise of settlement values and jury verdicts and the broadening of a defendant and an insurer’s liability exposure as a result of factors outside the actual litigation. Marie pointed out that social inflation is not a new phenomenon, but the effects have changed dramatically over the past decades. Marie researched how social inflation has impacted the trucking industry. She noted data from the American Transportation Research Institute, “They found that from 2006 through 2011 there were 26 cases which resulted in awards over one million dollars. In the five year period from 2014 through 2019, there were nearly 300 cases where the verdicts exceeded one million dollars.”

Alan discussed how the plaintiff’s bar uses “relentless advertising” and desensitizing the public to the concept of extraordinarily high awards at jury trials. When asked how liability insurers and their attorneys can combat all these tactics, he noted that close cooperation from the outset of the case is critical. “The partnership between the defense attorney and the insurance carrier has to start at the beginning. There needs to be an identification early on in the litigation, if this is a potentially dangerous case? If it is, then it’s incumbent upon the defense attorney and the insurance carrier to develop a strategy to combat it.”

The full podcast and transcript are available on AM Best’s website.