Social inflation: A framework for action

The term social inflation has become somewhat of a buzzword on insurers’ earnings calls in recent years - and especially in the past 18 months. The phenomenon is responsible for driving up the cost of claims across a range of lines, ultimately affecting insurers’ profitability.

The concept of social inflation, however, is ill defined, poorly understood, and very challenging to quantify. As a result, insurers have only a blunt set of tools with which they can manage it as a risk.

In this white paper, we move the subject forward by bringing clarity to its meaning, offering a framework for analysis, and explaining the early work that is under way by Guidewire and its partners to help insurers understand their exposure.

Topics covered:
• What is social inflation and why does it matter?
• Is social inflation on the rise?
• The trends distorting the market.
• Why unchecked social inflation hurts policyholders and businesses.
• A framework for action.
• Exploiting the boom in non-traditional data.
• A peril to be modelled and managed.