Premiums Are Rising, and Insurers Say Lawsuits Are to Blame

Insurance companies invoke a litany of reasons for raising premiums. Inflation has been a big one since prices took off in 2021. There’s a rise in car accidents involving drivers distracted by their phones. Climate change has fueled an increase in natural disasters destroying homes. Fraudulent claims are a perennial. And these days, a new justification is taking the spotlight: social inflation, a term that generally refers to rising legal costs. …

But even as US property and casualty insurers reel from years of net underwriting losses, some consumer advocates and legal experts push back on the idea that the legal system is at fault. They say there’s a lack of data directly tying premiums to litigation rather than typical cycles in the business. And even if lawsuits are on the rise, they say, some may be legitimate claims by people who’ve no other recourse…

For advocates, the real issue is what they consider intransigence on the part of insurers. “A large part of the problem here—and this is what we see in most states where there is suddenly a lot of litigation—is the actions of the insurance companies refusing to pay claims,” says Joanne Doroshow, executive director of the Center for Justice & Democracy, a consumer advocacy group.

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