10. Public distrust of corporation

Larger businesses and corporations draw a great deal of distrust from the public, which can result in juries that readily sympathize with plaintiffs with not much thought to the level of fault of the defendant.

(Credit: AmTrust Financial)

9. Playing to jurors emotions

Plaintiff attorneys are becoming more aware of how jurors' emotions can impact verdicts and are playing into those feelings to make it more likely they receive a favorable ruling, regardless of the case’s facts.

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8. Higher awards, changing jury composition

As the demographics that comprise juries change, there arises the potential for shifts in how cases will be viewed and awards determined.

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7. Tort reform rollbacks

In addition to reducing the amount of time during which a lawsuit can be filed, some state regulation changes are setting monetary caps on punitive and noneconomic damages that can be rewarded.

(Credit: AmTrust Financial)

6. Legal marketing and analytic

More attorneys advertising their services has led to more legal involvement in some types of claims, an increase in claim frequency and the expectation of larger settlements. Attorneys are using social media and analytics to not only reach more potential clients, but also uncover potential pro-plaintiff jury members.

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5. More litigation, changes to litigation funding

The diminishing of bans on litigation funding, the practice of third parties financing lawsuits in exchange for a portion of the settlement, is increasing insurance payouts and loss ratios.

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4. Definition of liability expands

The public has a consistently growing sense that someone should pay when damage or an injury occurs, regardless of negligence.

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3. The media & perceptions of value

News reports about extremely large settlements can give the public a sense that these large payout verdicts are more common. This can lead juries to believe defendants, particularly large corporations, can pay out much larger sums.

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2. Social media shape public opinion

Social media allows for ideas to be easily shared, no matter how extreme, which can easily sway how people feel about certain issues.

(Credit: AmTrust Financial)

1. Erosion of caps on punitive damages for pain and suffering

A number of state court decisions struck down noneconomic and punitive damage caps, which are award not to compensate plaintiffs but instead to punish defendants for intentional and malicious acts.

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During 2019, the number of U.S. verdicts resulting in $20 million or more was up more than 300% from the annual average between 2001 and 2010, according to a report on social inflation trends from the Geneva Association.

The report also found that since 2015, the median award for a case involving a single fatality has more than doubled. For cases involving sexual harassment, the verdicts tripled.

While other countries are seeing some signs of social inflation, the trend is most pronounced in the U.S., according to AmTrust Financial. This is because of the combination of adversarial legal procedures and a litigious culture, which has led to lawsuits and high jury awards or settlements.

“It is our obligation as insurers and producers to educate and assist our insureds on how we can mitigate the rising costs of litigation and settlement awards, fueled by social inflation, with loss control tools and clearly defined coverage terms,” Duffy Koller, head of AmTrust’s excess and surplus lines, said in a release.

Commercial auto has been the line most affected by social inflation, with rewards and settlements for accidents regularly surpassing $10 million. Other lines that are heavily impacted by social inflation trends include medical malpractice, D&O, umbrella, excess liability and general liability, the insurance company reported.

The above slideshow highlights the 10 drivers of social inflation, according to AmTrust, and includes tips to help small businesses limit their exposure to these risks.