Kennedys releases report addressing global claims inflation

Kennedys have released a report named “Claims inflation in non-injury insurance losses: a global review” in October 2023. The report states that cost inflation, the impact of the pandemic and the Russia/Ukraine war on supply chains and frustrations with governments and corporations are driving excess claims inflation. 

The report looks at the nine countries that Kennedys has in their global netowork to illustrate how claims inflation is a global issue. Kennedys lawyers hope to spark a discussion across the insurance market to encourage greater collaboration. 

Social inflation, increasing the volume and cost of claims attributed to social trends, causes many of these issues.  These include: the cost-of-living crisis, climate change activism, the #MeToo movement and gender inequality.  

On the Covid pandemic, the report states “Its effects are felt globally from the way in which business interruption claims have been assessed by the courts to the potentially detrimental effect of (re)insureds using alternative, sometimes cheaper, materials and suppliers due to supply chain difficulties.” 

This uncertainty caused by excess claims inflation is making it increasingly difficult for (re)insurers to accurately price their products. 

The report also highlights the rise in global group actions, which bring with them an increase in costs and in potential awards. This may impact (re)insurers’ ability to set accurate reserves in the future. 

The report warns that failing to consider excess claims inflation can lead to under-reserving, leaving policyholders without adequate cover when they come to make a claim. 

Ingrid Hobbs, partner at Kennedys, says: “While many of the risks we identify in our October 2023 report are affecting countries around the world, it is anticipated that they will continue to play out differently depending on local circumstances. But on both a national and international level, collaboration is key in responding to these risks.”  

Image: Kennedys

Emma Cockings Emma is a content editor for Claims Media. Emma is a experienced writer with a background in client-centric personal injury for a major firm. She has attended and reported on multiple brokerage events throughout her career.