The story goes something like this, the plaintiff drives away after being rear-ended at a red light. The impact speed was estimated at 4 mph; however, later on…the plaintiff complains of neck stiffness and ultimately undergoes spinal fusion surgery. Given the circumstances of the accident, the defendant claims the neck surgery was unnecessary. The jury sided with the plaintiff, awarding $400,000 for medical bills and lost wages, plus $2,300,000 for pain and suffering (Smith vs. Bishop, 2/2/18)
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The Relationship Between Social Inflation and Personal Liability Exposure
bcuinsurancerisk • October 17, 2018
Stories such as these are likely more common than you think. According to Jury Verdict Research’s, Current Award Trends in Personal Injury, 54 th Edition (2015), the percentage of personal injury awards exceeding $1,000,000 has increased throughout the entire U.S., with the Midwest and Southeast seeing the greatest increases. Also, according to this same report, the median personal injury compensatory award in places like New York and Illinois are up to 5x greater than the nationwide median.
Considering the rise in plaintiff awards for personal injury claims far outpaces the increasing cost of medical services, what other factors are contributing to higher awarded damages? A Google search for ‘pain and suffering’ returns the following: “Injury Claim Coach, Increase your Pain and Suffering Award by Thinking Link a Claims Adjuster” ( www.injuryclaimcoach.com )
Many believe examples such as this Google search result illustrate an effort by a well-capitalized industry to influence these trends via a phenomenon known as Social Inflation.
SOCIAL INFLATION
Within the Property and Casualty insurance industry, many believe Social Inflation is the primary threat to the industry’s already marginal profitability. According to a June 2017 Assured Research report, evidence is mounting that social inflation has returned after a 20-year hiatus.
Although Social Inflation is not universally defined, most would agree that it contains changes in the propensity of the legal system to interpret contracts broadly or reward plaintiffs with rising levels of awards. Social inflation also encompasses the trend of claimants to involve an attorney in their claim – or to file a claim or lawsuit in the first place .
TRIAL LAW MARKETING: BROADCAST, SEARCH AND SOCIAL MEDIA STRATEGIES
Trial Attorneys are spending more than $900 million on television advertising each year – a 70% increase since 2008 and a rate of growth that far outpaces TV spending by all other industries. According to the Institute for Legal Reform, “Legal television ad spending, unlike other major TV advertising categories, such as automotive sales, restaurants, and product retailers, has consistently increased before and after the Great Recession (2008). Legal advertising is not only recession-proof, but also politics-proof, as it does not decrease during election years as it does for other advertisers due to higher spot costs and lower spot availability.”
In addition to traditional TV advertising, lawyers are also major players in social media and online marketing with 20% of law firms surveyed saying they have invested in content generation over the past two years. Specific to personal injury litigation, 23 of the top 25 Google key words are for personal injury law firms. “San Antonio car wreck attorney,” at the time of the ILR report, was the most expensive Google key word at $670 per click.
PERSONAL INJURY VERDICT TRENDS - ALL U.S. STATES
AWARDED DAMAGES
< $100,000
$100,000-$499,999
$500,000-$999,999
$1,000,000-$4,999,999
> $5,000,000
1995
65%
21%
6%
8%
< 1%
2015
62%
18%
5%
10%
5%
GROWTH (+/-)
-3%
-3%
-1%
2%
5%
FINDING SAFE HARBOR
Given high personal injury awards are decreasingly correlated with a defendant’s gross negligence, having a high-limit, personal liability umbrella insurance policy is an essential estate planning strategy. However, Ace Private Risk Services (now Chubb Insurance) surveyed individuals with a minimum net worth of $5 million and found that 20% of respondents did not have an umbrella policy and 25% purchased limits less than $5 million. It can only be assumed these individuals have been poorly advised and are unaware of the significant financial risk they retain.
Simply purchasing an umbrella policy is not enough. Policy limit selection is vitally important and must consider the following three factors:
- An insurance company’s motivation is to settle a claim for the least amount of money possible relative to the policy limit
- Personal injury jury verdict data
- Special individual circumstances (public profile, family dynamics)
Personal injury verdict and societal trends are not favorable to the defendant. Efficient risk transfer tactics are widely available but, as the data suggests above, too often overlooked. Personally indemnifying someone else’s pain and suffering is avoidable. It all begins with one phone call…to your insurance advisor.
Understanding the Risks of Wood Roofs: What Insurance Carriers Need You to Know
The Power of a Home Inventory Video Imagine this: You’ve spent years building a home filled with cherished possessions, from your grandmother’s antique vase to your latest tech gadget. Suddenly, disaster strikes. A fire, a burglary, or a natural calamity – the result is the same: your precious items are gone. Amid the chaos, the last thing you want to do is try to remember every single item you owned. This is where a home inventory video becomes invaluable. The Emotional Toll of Loss Experiencing a significant loss can be emotionally devastating. It's not just about the monetary value of the items lost but the memories and sentiments attached to them. Recalling every possession under stress is nearly impossible, and the process can be heart-wrenching. By creating a home inventory video, you can ease this burden, ensuring you have a detailed record of your belongings when you need it most. Steps to Create Your Home Inventory Video 1. Preparation Start by gathering your equipment. A smartphone or a video camera will do the job. Walk through your home, ensuring all lights are on for clear visibility. For dark corners, use a flashlight or the light on your smartphone. 2. Filming Begin with a Sweep: Start with a general sweep of each room to set the scene. Detailed Description: Open all drawers, closets, and cabinets. As you film, describe each item briefly. For example, say, “a set of 12 forks and spoons” rather than filming each one individually. For particularly valuable or unique items, take more time. Pick them up and hold them close to the camera, explaining their significance and details. 3. Storing Your Video Once your video is complete, store it safely. Back it up in multiple places: an external hard drive, the cloud, or even with your insurance agent. This ensures you have access to it when needed. 4. Updating Your Inventory Regularly update your inventory, especially after making significant purchases. Set a reminder to review and update your inventory annually. The Practical Benefits A home inventory video not only helps you remember what you had but also speeds up the claims process. Insurance companies appreciate detailed records, and a video can serve as indisputable proof of your possessions. This can be the difference between a smooth, swift claim process and a prolonged, stressful one. Creating a home inventory video might take a bit of time, but the peace of mind it offers is invaluable. Don’t wait for the unexpected. Start filming today to ensure you and your family are prepared for whatever comes your way. Your future self will thank you!
The latest update in the high net worth insurance market highlights significant changes impacting policyholders. Florida's state-backed insurer secures $3.56 billion in reinsurance for the hurricane season, while Allstate proposes a 34% rate hike for California homeowners. The post also discusses the alarming rise in distracted driving among Gen Z, increasing by 24% from 2022.
Flooding isn’t just a coastal issue; it can impact homes anywhere. From heavy rain to unexpected storms, non-coastal regions can experience severe flood damage that leads to costly repairs. This makes comprehensive flood insurance essential for homeowners. To highlight the importance of this coverage, let's look at some real-life examples from Chubb's latest claims stories. Reclaiming a Home Submerged by the Storm An intense storm hit a non-coastal town, causing a nearby river to overflow. The resulting floodwater pushed open a home's basement door, inundating the interior. The water damaged carpets, drywall, insulation, paint, cabinets, baseboards, and even a pool table and family heirloom furniture. Chubb quickly assessed the damage and confirmed coverage under the client’s flood policy, enabling prompt restoration and recovery. Chubb claim payment: $227K Underwater and Undeterred: Rebuilding After a Hurricane A hurricane brought heavy rain to another non-coastal area, submerging homes in water. One client's unfinished basement suffered extensive damage, necessitating the replacement of flooring, the hot water tank, furnace, and electrical panel. The first floor required new hardwood and tile flooring, kitchen appliances, cabinets, and plaster walls due to elevated moisture levels. The garage's overhead door was also destroyed. Chubb responded promptly, recognizing the damage and providing an estimate to start repairs immediately. Chubb claim payment: $300K These stories demonstrate the value of having comprehensive flood insurance and the commitment of Chubb to support their clients through significant losses. For more detailed examples and to understand the difference Chubb’s claims service can make, download the full brochure below and visit Chubb's website . Ensure you’re protected against unexpected events. Contact BCU Risk Advisors to discuss your insurance needs and secure comprehensive coverage today.
Why Should You Care About Personal Liability?
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