Across the carrier market, the impact of rising claims complexity is intensifying cost pressures. The Carrier Perspective: 2026 Claims Insights, our annual whitepaper offering a comprehensive overview of the carrier market, found that 64% of North American carriers observed an increase in claims complexity over the last 12 months, resulting in higher payout values and driving up claim costs faster than global averages.
From mounting litigation pressures, social inflation, compounding medical inflation, and ongoing workforce challenges, these broader industry shifts are creating sustained structural pressure on the legacy claims environment, forcing carriers of all sizes—managing general agents (MGAs) and mutuals—to continually reassess pricing models and claims management strategies.
Let’s explore the primary cost drivers influencing legacy claims, as well as the strategies insurance leaders are using to address them and build financial resilience.
Increased claim severity drives higher legacy payouts
According to our 2026 Claims Insights whitepaper, nearly half of North American respondents (49%) identified social inflation and litigation pressures as key contributors to escalating claim severity. Forces such as growing anti-corporate sentiment, extensive attorney advertising, and growing sympathy for plaintiffs are increasing settlements and litigation duration for carriers across the board.
However, intensifying factors such as large jury verdicts and the expansion of third-party litigation funding (TPLF) can disproportionately impact older liability claims in legacy portfolios. TPLF can increase the scale, duration, and financial stakes of disputes, which only compound for open legacy claims.
Furthermore, long-tail liabilities remain exposed to today’s litigation climate and social sentiment, forcing carriers to revise and rework their claims resolution and litigation strategies as time goes on. Beyond the financial strain of legacy claims, slower resolution timelines can strain internal team resources, intensifying the workforce challenges already presented by legacy claims.
For many organizations, early intervention and faster settlement strategies are key to effectively resolving claims and avoiding jury trials where the impact of social inflation is more pronounced. This includes alternative dispute resolution (ADR), such as mediation and arbitration, and investing in predictive analytics and AI to identify claims likely to escalate to large jury verdicts.
Another strategic response is strengthening your litigation management with a specialist claims team, dedicated to minimizing litigation exposure on long-tail claims.
Medical claims intensify cost pressures on long-tail claims
Medical inflation continues to be a primary cost driver for carriers. In fact, 56% of surveyed carriers identified it as the leading contributor to rising claims-related costs, with treatment and rehabilitation expenses exceeding actuarial expectations. Last year, medical costs per claim rose between 5% and 12% in several U.S. states.
This volatility is due largely to the shifting dynamics within medical-related claims, such as longer recovery periods, extended wage replacement durations, general wage inflation, and greater claims complexity when comorbid or psychological conditions are involved.
For legacy claims, these unpredictable dynamics create long-term compounding liabilities that have a significant financial and operational impact on claims resolution. As with litigation and social inflation, open claims originating years ago are still subject to current medical pricing and evolving standards of care. The longer a claim remains open, the more it is exposed to inflationary drift.
To address medical inflation, our 2026 Claims Insights whitepaper found that nearly three-quarters of North American carriers are investing in AI-driven predictive analytics to detect and mitigate the impact of medical inflation earlier in the claims cycle. This approach once again relies on early intervention to prevent long-tail liabilities and reduce unnecessary cost escalation.
For existing legacy claims, industry leaders are also investing in clinical expertise for enhanced medical management, applying cost-containment strategies such as limiting provider networks and negotiating pricing with partners, and accelerating resolutions through structured settlements that remove long-term exposure to rising medical costs.
A strategic approach to legacy claims
In most cases, the key to managing rising claims complexity and costs is early intervention that predicts and prevents legacy claims. For open legacy claims, a swift and effective resolution is crucial.
However, 94% of respondents to our 2026 Claims Insights whitepaper highlighted workforce challenges as a major operational constraint to superior outcomes by slowing claims resolution and increasing administrative burden.
Engaging a claims and risk management partner with a dedicated legacy claims team, such as Gallagher Bassett’s Carrier Practice, ensures legacy claims are expedited and resolved efficiently. Our experts leverage cutting-edge claims technology to deliver unparalleled analytics and insights, and decades of claims-handling knowledge to tackle complex legacy claims that alleviate the burden of legacy claims from internal resources.
Discover more about our legacy claims solutions and connect with us to learn about how our Legacy Practice experts can help you overcome barriers to resolution for legacy claims and unlock long-term success.
