MITIGATE THE IMPACT OF SOCIAL INFLATION

Aaron Parker| May 14th, 2026

Risk Management

If you haven’t already felt the weight of social inflation—that is, the increase in claims costs that arises from behavior and attitudes—you almost certainly will when renewal time comes. Left unaddressed, social inflation translates directly into higher premiums, tighter limits, and tougher underwriting scrutiny.

The elements that drive social inflation are out of your control, but that doesn’t mean you have no power to protect yourself. With a few smart and easy-to-implement practices, you can reduce the time and expense of a claim when the need arises.

SOCIAL INFLATION: HOW WE GOT HERE

A perfect storm of factors fed into the world of higher claims from social inflation:

There’s been a steady rise in negative public sentiment toward corporations, insurers, and other large institutions, leading to larger awards from juries looking to exact accountability.

Highly publicized nuclear verdicts have reset expectations and paved the way for a succession of outsized awards. As these results proliferate, people become numb to numbers in a way that further drives up settlement costs.

Changes in how lawsuits are funded have given plaintiffs broader access to litigation. That is, third-party litigation funding gives parties who otherwise wouldn’t have an interest in a suit the chance to contribute to lawyers’ fees in return for a portion of any award that results.

A substantial jump in attorney advertising means more people are aware of their options when they feel they may have experienced harm, and so are more likely to pursue a lawsuit.

Small wonder that premiums are rising and traditional liability limits aren’t adequate anymore.

WHAT SOCIAL INFLATION MEANS FOR YOU

For insureds, the downstream effects of social inflation are showing up quickly—and clearly—at renewal. Many clients already have felt the impact of social inflation in their renewals. Pricing is up, limits are tightening, and we’re seeing more coverage challenges.

The pressure is on for underwriters, and as a result, they’re getting more in the weeds of their insured’s operations. The vetting process has become extremely rigorous and much broader as carriers who’ve been bitten are struggling not to let profitability deteriorate. They’re widening exclusions and taking on fewer insureds—seeking to insure only the best of the best.

Earning a renewal that won’t eviscerate your budget is quite a challenge.

YOUR BEST MOVE? BOOST YOUR DEFENDABILITY

Social inflation is a troubling situation from both sides, but all is not lost. Your best bet for affordably keeping the coverage you need is being able to show your operation is safety-minded—and maintaining the discipline and documentation to back that up.

Defendability is the ability to demonstrate—through disciplined processes and documentation—that your organization operates with safety, accountability, and consistency. Those companies who make defendability an operating standard breathe easier knowing they have the tools to resolve an incident efficiently before it becomes a drawn-out and costly lawsuit.

If you haven’t already, take these steps to increase your own defendability:

Prioritize incident response.
Have a plan in place so you’re not scrambling after the fact to collect information and mitigate fallout. Treat incident response like a business process—determine who owns what, how you’ll document, and who gets in touch with any partners you need to involve. Your underwriter wants to know you have all of these details clearly defined and distributed to relevant team members.

Ensure documentation discipline.
Defining the process is a terrific start. Making that process an essential part of how you do business creates a cultural shift that protects your business. If you haven’t had an incident in months, terrific! But have you kept your documentation process top of mind so your front line is ready?

Train your team on common pitfalls—and how to avoid them.
You want certain do’s and don’ts to become second nature to those who’ll document an incident. That means training on fact-finding but also on communications with involved parties. This is a nuanced area of planning that will be specific to your location, business, and other factors, but two common examples are “don’t admit fault” and “do take photos.”

Be ready to show how you’ve reduced claim frequency.
A zero-accident operation is a nice idea but almost never a reality. Get as close as you can by mitigating exposures wherever you identify them. Enact a regular schedule of inspecting your facilities in terms of housekeeping and maintenance—and prioritize repairs. Avoiding even the perception of a frequency problem is critical to renewal outcomes, and the better you are at telling (and showing) a safety story to your underwriter, the better your results.

Check the data.
What claims are other organizations in your industry facing and how can you defend yourself against them? Has there been a trend within your own operation? Any data you can use to address vulnerabilities will go a long way toward defendability, whether that means how you train staff or how frequently you schedule maintenance.

As is so often true, preparation makes a huge difference when it comes to positioning yourself for renewal time and for addressing—or, better, avoiding—incidents. At MJ, we help organizations define, document, assess the data trends, and operationalize defendability so they’re better positioned at renewal and better protected when incidents occur

If you’d like help strengthening your approach, let’s connect.