Liability claims costs in the United States are rising at a pace that traditional economic indicators such as wage inflation, medical-cost trends, and consumer price index growth no longer explain, according to Swiss Re.
The reinsurer’s latest research identifies a widening gap between economic fundamentals and claims experience, a phenomenon it calls “social inflation.” This trend is largely attributed to legal system abuse, where behavioral factors play a significant role in litigation outcomes.
Swiss Re’s 2025 Behavioral Social Inflation Study, based on a survey of 1,150 US adults exposed to randomized legal scenarios, quantifies the behavioral forces shaping today’s liability environment. The study finds that juror sentiment has shifted in favor of plaintiffs, influencing verdicts across the board.
The impact is not limited to large corporations; in cases involving severe injury, jurors are nearly as likely to recommend high compensation against small and medium-sized enterprises (SMEs) as against Fortune 500 companies.
The study highlights a fundamental change in public attitudes toward litigation. Swiss Re reports that only 56% of respondents now believe there are too many lawsuits in the US, a significant drop from 90% in 2016.
This shift suggests that litigation is increasingly seen as a legitimate means of seeking justice, rather than a last resort. Support for larger awards has also grown, with 76% of those surveyed indicating that damages in lawsuits are either too low or just right, up from 58% in 2016.
Attitudes toward corporate defendants have also changed. Eighty-five percent of respondents said large corporations prioritize profit over safety, while only half said the same about SMEs. Support for punitive damages remains high, with 79% agreeing they are the best way to deter corporate misconduct.
Notably, 67% support punitive damages against SMEs, indicating that smaller firms are not immune to growing skepticism. Respondents were also more likely to recommend compensation even in ambiguous scenarios; 42% said a large corporation should pay medical expenses even if not directly at fault, compared to 29% for SMEs.
The growing influence of litigation funding by third-party investors is adding another layer of complexity to the US legal landscape. These arrangements, where outside investors finance legal claims in exchange for a share of any recovery, have raised concerns about transparency and potential conflicts of interest.
Swiss Re’s findings underscore the urgency for tort reform. The study notes that public attitudes favoring high compensation and accountability have created favorable conditions for plaintiff attorneys and third-party litigation funders.
Some states, including Florida, Georgia, and Louisiana, have introduced reforms to cap damages and limit attorney fees, but broader efforts are needed to address systemic costs and maintain insurance affordability.
In response to these challenges, the insurance industry is intensifying coalition-based efforts to address social inflation. Insurers, brokers, and customers are increasingly working together to tackle the main drivers of rising claims costs, share information, and advocate for legislative reforms.
For insurers and reinsurers, the study highlights persistent uncertainty in the US liability market. Legal system abuse shows no signs of slowing, and pricing uncertainty remains high.
Maintaining underwriting discipline and adjusting rate structures to reflect loss trends are essential for profitability. For defense counsel, the research supports the use of early, fact-based counter-anchoring to influence jury expectations and reduce loss severity.
The study notes that no market participant is insulated from these trends. SMEs, in particular, face significant exposure to large verdicts, often without the capital reserves of larger firms.
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