Rise in claims costs over time, driven by economic inflation and evolving judicial and medical practices.
Claims inflation encompasses all factors causing unit claim costs to rise over time. It includes general economic inflation (materials, parts, labor), medical inflation (care and rehabilitation costs), judicial or social inflation (increasing court awards, particularly pronounced in the US as 'social inflation') and regulatory changes. Exceeding general economic inflation is common in non-life: courts are often more generous on bodily injury liability than CPI alone would suggest. Claims inflation is a key parameter in prospective pricing and as-if restating of historical data.
Average bodily injury cost in French motor: +7%/year 2020–2024 vs CPI +3.5%/year → claims inflation 3.5 points above general inflation per year.
claims inflation, social inflation, sinistre inflation, cost inflation, tendance sinistres