As we enter the second half of 2025, many of the challenges carriers experienced throughout the first half of the year are set to persist. Social inflation is high among those challenges, with its influence on the industry continuing to rise and the impact on insurance losses set to intensify without effective intervention from carriers.
When we released the third annual edition of our whitepaper, The Carrier Perspective: 2025 Claims Insights, social inflation was already at the forefront of carrier concerns. A significant percentage of respondents reported shifting the strategies they use to manage its influence away from tried-and-tested means, such as increasing premium rates.
This marked change in approach signifies that carriers are actively exploring the most productive ways to limit their exposure while maintaining premium affordability to sustain comprehensive insurance solutions.
While this is not an easy balance to strike, carriers who are diversifying their methods are on the right track to achieving the best outcomes. Social inflation is fueled by many contributing factors, so adopting a multifaceted approach to counteract the situation is likely to yield the most significant results.
For those looking to explore different strategies, here are three ways to prevent, minimize, and stabilize the influence of social inflation as it continues its upward trajectory.
Leverage Advanced Data Analytics Tools to Prevent & Predict
Advanced data analytics and technology are powerful tools in the battle against social inflation. They arm carriers with insights into emerging trends and patterns that contribute to social inflation, assisting in making informed decisions and developing strategies to overcome these challenges.
Predictive modeling can pinpoint potential high-risk areas, allowing carriers to stay ahead of the curve, while performance analytics play a crucial role in facilitating more informed underwriting decisions.
Early detection empowers you to make well-informed decisions and proactively manage potential challenges. A comprehensive RMIS suite, such as our award-winning Luminos offering, can help maximize operational efficiency and reduce the total cost of risk across your business—beyond just assisting with social inflation.
Explore Alternative Dispute Resolution Methods
Alternative dispute resolution methods were one of the leading strategies that North American carriers reported turning to in The Carrier Perspective: 2025 Claims Insights to manage the current wave of social inflation.
Proactive approaches to litigation, such as mediation to resolve disputes before jury trials, not only mitigate the risk of high jury damages but also prevent the reputational harm that can accompany them.
Structured settlement options are also proving effective, offering tax advantages and allowing for confidentiality clauses and restrictions on public disclosure that safeguard your company’s brand.
By adopting these alternative dispute resolution methods, carriers can streamline the claims settlement process, reduce litigation costs, and achieve more efficient and equitable outcomes, all while protecting their organizations from potentially costly reputational risks.
Unlock Specialist Resources
Special circumstances call for specialized expertise. While social inflation may not seem like a special circumstance due to its ongoing presence in the insurance landscape in recent years, its rising impact is quickly making it a situation best managed with specialist resources.
For example, specialized industry-experienced claims and risk management partners, such as Gallagher Bassett (GB), can assist in mitigating risks by providing access to additional support for policy holders, such as training, resources, and tools. These resources help businesses manage their risks more effectively, with the aim of reducing exposure to claims.
Our team also specializes in implementing advanced claims management strategies to handle claims with greater efficiency and effectiveness. This includes providing early intervention in claims, employing strategic negotiation tactics, and empowering clients with access to highly trained, experienced claims adjusters to de-escalate litigation.
Outsourcing to a trusted partner also provides access to diverse expertise that can identify policy adjustments to lessen the impact of social inflation without affecting affordability. This may involve revising terms and conditions and modifying coverage limits, exclusions, and endorsements to better align with the current risk landscape.
By leveraging data and analytics to better predict and understand the dynamics of social inflation, exploring alternative dispute resolution methods, and collaborating with industry experts, carriers can take control and limit the impact of social inflation, ensuring long-term stability and profitability.
To find out how our dedicated Carrier Practice team can help you navigate the complexities of social inflation, reach out to us today.
