While some observers reported a letup in social inflation during COVID-19 lockdown periods, reinsurance executives speaking at a recent conference said they fear U.S. jury verdicts and settlements will soon resume their upward trajectory.

Jean-Paul Conoscente, chief executive officer of SCOR Global P&C, and John Bender, CEO of Allied World Reinsurance Company, discussed the topic when they participated on a panel of reinsurance executives during the Casualty Actuarial Society Seminar on Reinsurance in early June.

Conoscente reported: “We see the trial lawyers going for property BI [business interruption] lawsuits as the next area to invest the resources. As a result [of] that, we have seen in March and April some early settlements of [existing] lawsuits to free up resources. But it’s hard to tell if that’s just temporary—if the BI lawsuits will be replacing the social inflation lawsuits.”

“My own personal view is that, unfortunately, COVID-19 will probably just make social inflation worse…I have a pessimistic view of what the economic outlook looks like. We’re entering a recession in my view. And as a result, I think a lot of the drivers of social inflation, especially around the attitudes of people trying to get money to people who ask for it, whether they have a right to do so or not by contract, I think that will continue going forward.

“Social inflation is here to stay in my view,” he concluded.

Bender said he put social inflation higher on his list of post-COVID reinsurance industry issues than paying out COVID-related reinsurance losses. “The thing that concerns me most of all in the market today is social inflation. It concerned me long before COVID got here. It concerns me more now. Will we take COVID losses at Allied World? Yes, we will. Are there anything that I’m worried about not being able to manage? Not at all,” he said, when asked what worried him most.

Coming back to the topic when asked specifically whether the pandemic would mitigate or exacerbate social inflation, Bender said, “The plaintiffs bar [is] playing chess, and our industry is still playing checkers…They’re in the legislature. They’re sitting on the bench, and they’re the ones attacking us.” And they are highlighting a current social environment of “haves and the have nots” in America, he said.

Further describing that environment, he said, “You have the Kardashians who have proved to pretty much every kid that a million dollars is not really a lot of money. It’s like a dollar now. And I’m going to get mine. Those are the same people that are sitting on juries thinking, ‘I’ll give this person this because I’ll get mine later,'” he said, urging the insurance and reinsurance industry to look for ways to offset the efforts of the plaintiffs bar going forward.