APCIA blasts CFA and CJ&D for accusing insurance industry of price inflation

David Sampson, president and CEO of the American Property Casualty Insurance Association (APCIA), has issued a robust response to the Consumer Federation of America’s (CFA) and Center for Justice & Democracy’s (CJ&D) document, How the Cash-Rich Insurance Industry Fakes Crises and Invents Social Inflation.

The report argues that Americans are being misled by the industry when it tries to justify rate hikes after years of stable or decreasing premiums, by blaming ‘social inalfation’.

“Insurance companies have never been forthcoming about why ups and downs in insurance premiums happen,” it states. “In these cyclical hard markets, they have internally admitted that the cause is the industry’s own self-made boom and bust economic cycle. But publicly they have attempted to cover up their mismanaged underwriting and accounting practices by blaming lawyers, juries, and the legal system. Today they are making such claims even though both litigation data and the industry’s own loss data show that claims are not spiking and ‘tort costs’ are stable.”

In response, Sampson said: “The CFA and CJ&D report is methodologically flawed. It is little more than a rehashed amalgam of the authors’ opinions, accusations, and news articles masquerading as analytics.

“This fictional work is directly at odds with what we know. Social inflation is real and rampant, and burdening every household with thousands of dollars in additional costs each year.”

He said that median jury awards for personal injury lawsuits have more than tripled in just the last 8 years, with no relief in sight. The number of mega/nuclear verdicts, defined as jury awards over $5 million, has grown by well over 50 percent since 2011, and third-party litigation financing is surging, with more than $9 billion of capital invested in the US alone.

Plaintiff attorney involvement is on the rise, with plaintiff lawyer drug-injury advertisements on television, radio, and social media having increased by more than 60 percent since 2008.

“It is troubling that the CFA and its allies in the plaintiffs’ bar would try to manipulate policymakers into ignoring factual cost increases that harm consumers,” he said. “Moreover, it is ironic that they claim that ‘social inflation’ is an industry invention when, based on the facts, it is a product of plaintiff’s bar lawsuit abuse.

“The hard proof of social inflation isn’t difficult to find. The 'tort tax', what all businesses and individuals bear for this runaway litigation 'market', is on the rise and currently exceeds $3,300 per household nationally, with costs in many problem states well above that figure.

“APCIA continues to advocate for more meaningful civil justice reform across the country to reduce consumer and business costs and restore balance to the civil justice system."