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Sep 20
E&O Guardian Article on Inflation's Impact

Swiss Re Corporate Solutions is closely monitoring two types of inflation that may be relevant to your business and errors & omissions insurance: consumer price index inflation and social inflation.

Consumer price index (CPI) inflation. This type of inflation is measured by the CPI, which is defined as the price change of a basket of goods or services typically purchased by specific groups. This inflation index rose 7.5% in 2021 and to an annualized rate of 8.3% for April 2022—the highest level in 40 years.

Why does this matter to you? Because it drives up the overall cost of claims. Consumer price increases result in paying more on claims due to rising attorney fees for claims defense and higher actual claim values. For instance, due to inflation, the cost of rebuilding a home that burned down may be 20% more for materials and labor than it was three years ago.

Social Inflation. This type of inflation is related to strategies used by plaintiff attorneys to inflame juries and increase jury awards. Our defense counsel uses strategies to combat these emotionally charged tactics, but it can be an uphill battle.

Read the full article on E&O Guardian, the Big “I" Professional Liability risk management information site.

Learn more about the Big “I" Professional Liability program here.

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