The Challenge of Social Inflation: How SigmaSight Can Empower Insurers to Navigate Rising Costs

In today’s rapidly changing world of insurance defense, insurance companies face a growing challenge that could significantly impact their financial stability and strategic decision-making: social inflation. This phenomenon, which sees settlement sizes and jury awards inflate due to societal trends and views towards litigation, poses a critical concern for insurers. As insurers increasingly fear the unpredictability of jury verdicts, they often choose to settle claims at higher values than might be necessary, a strategy that, while safe, is financially unsustainable in the long run. This is where SigmaSight steps in, offering robust analytics tools designed to empower insurers with the insights needed to make informed decisions.

Understanding Social Inflation

Social inflation refers to the rise in insurance claims costs due to factors not directly tied to economic inflation. It is fueled by a variety of elements, including aggressive litigation tactics, anti-corporate sentiment, and a more sympathetic approach towards plaintiffs. This trend not only leads to increased claims costs but also contributes to higher premiums for policyholders, impacting the overall affordability of insurance.

SigmaSight’s Analytical Tools: A Game Changer in Combatting Social Inflation

Predictive analytics on Jury Behavior and Award Trends: SigmaSight’s Analyzer harnesses the power of data analytics to provide a detailed overview of past verdicts and settlements across various jurisdictions. This data allows insurers to identify trends in jury behavior and award amounts, helping them predict potential outcomes more accurately. By understanding these patterns, insurers can better assess the risk of going to trial and make more strategic decisions about whether to settle or fight a claim.

Attorney performance metrics: One of the key features of Analyzer is its ability to evaluate the performance of plaintiff attorneys. Understanding an attorney’s track record in securing high verdicts or their propensity to settle can be a vital asset in preparing for litigation. SigmaSight provides metrics on verdicts, trial rates, filings, and non-economic damages associated with specific attorneys, offering insurers a clearer picture of what to expect in negotiations or at trial.

Demographic insights: Jury demographics play a crucial role in the outcome of trials. Analyzer offers detailed demographic data that helps insurers anticipate how a jury might react to certain cases. This insight is crucial for insurers to determine the likely sentiment of a jury towards a claim, guiding their decisions on whether settling is a safer option compared to facing a potentially sympathetic jury.

Leveraging SigmaSight for strategic advantage

With SigmaSight, insurers are not only equipped to handle the complexities of social inflation but are also empowered to turn insights into action. Here’s how insurers can leverage SigmaSight effectively:

• Strategic decision making: Use Analyzer’s analytics to develop a comprehensive understanding of risks associated with different venues and attorneys. This strategic insight allows insurers to choose battles wisely, conserving resources and opting for trials when the odds are more favorable.
• Enhanced negotiation tactics: Armed with data on attorney behavior and historical awards, insurers can enter negotiations with a stronger hand, tailoring their approaches based on empirical evidence rather than assumptions.
• Proactive risk management: By predicting trends and potential jury sentiments, insurers can proactively manage their risk portfolios, adjusting strategies to mitigate the impact of social inflation.

As the challenge of social inflation continues to evolve, the need for sophisticated tools like Analyzer becomes increasingly critical. By integrating data-driven insights into their daily operations, insurers can navigate the complexities of modern claims environments with confidence and precision. Analyzer is not just a tool; it’s a strategic partner in the quest to balance risk and reward in an era of heightened legal uncertainties.

Find out more about our Analyzer product here.

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