H2. Why Claims Severity Is Rising — and Why 2025 Feels Different
Rising claims costs are driven in part by inflation, of both the traditional kind and the social kind. Pushing jury verdicts, settlement demands, and overall claims costs higher, social inflation is the convergence of cultural, legal, social, and financial dynamics — and claims departments feel the effects.
Strategically managing rising claim severities is the ultimate goal for insurers. As the frequency and intensity of high-dollar claims rise, it is critical to understand the influence of social inflation on the insurance industry and how to respond proactively to manage costs and outcomes, even as social inflation continues to rise.
H2. Why Claims Severity Is Rising — and Why 2025 Feels Different
Taking a technology-forward approach to claims strategy can help insurers control costs and reduce severity, even during shifts in market conditions caused by social inflation. Insurers have solutions available, including using digital claims management platforms to manage claims.
This technology-enabled approach gives insurers access to strategic claims management tools, providing early intervention to allow insurers to identify high-risk claims early and intervene appropriately; claims triaging with AI and predictive modeling to flag outlier claims before they escalate; and fraud analytics to help spot red flags sooner. Litigation management tools streamline legal workflows and improve outcomes, while personalized customer communications give insureds clear, proactive information. These tools help insurers develop timely settlement strategies, allocate resources efficiently, and limit unnecessarily elevated payouts.
A modern claims management platform is essential for insurers navigating the shifting dynamics of social inflation. The world is not static, and legacy point solution interactions and bespoke feature development impedes speed to market. Dynamic and configurable platforms allow for claims teams to dynamically drive automation, insight, and results faster and cost-efficiently, even when the external environment remains unpredictable, unstable, and even unfavorable.
The reality is that social inflation isn’t going away. And as claims severity continues to rise, policyholders will inevitably pay some of these additional costs, adding to perception challenges already facing the industry. The forces driving social inflation are only intensifying, but with strategic claims management and modern claims technology, insurers can mitigate these risks. Tools that streamline operations, improve insights, and connect policyholders and insurers in more personalized ways give claims departments the ability to manage rising severities without losing sight of expenses and service.
To stay ahead of social inflation, insurers must move beyond traditional approaches and embrace technology-led claims strategies built for the volatility of today — and tomorrow.