According to the National Association of Insurance Commissioners (NAIC) social inflation is a term that describes how insurers’ costs are increasing above general economic inflation.
What can cause social inflation? The “social” aspect of the term represents shifting social and cultural attitudes about who is responsible for absorbing risk. Travelers recently outlined four factors contributing to social inflation and the NAIC says social inflation is “generally thought to be due to a trend in the increasing litigatino costs brought by plaintiffs seeking large monetary relief from their injuries.”
How does it affect Forsyth County residents? Social inflation may appear to only affect insurers, but like other expenses, these inscreased costs often trickle down to consumers and spread throughout the economy. For example, many Forsyth County residents are seeing rate increases over 20% even though they did not file a claim last year. Insurers we talk to on monthly basis say that Georgia is one of the bottom 5 states in terms of profitability and that’s at least partly due to social inflation factors here in the state.
For more information about social inflation and other factors affecting the cost of auto and home insurance, please talk to your local independent insurance agent.