A lingering dispute between the Boy Scouts of America and insurers over a settlement agreement to resolve tens of thousands of sexual abuse claims underscores how social inflation is impacting insurers, according to a new AM Best report.
A recent court approval for a restructuring settlement agreement in the Boy Scouts of America’s bankruptcy case left open a previous $650 million deal, which did not have victim support, between the Boy Scouts of America and The Hartford Financial Services Group, Inc.
In its Best’s Commentary, “Boy Scouts of America Dispute Reveals Myriad Social Inflation Concerns,” AM Best notes that the case highlights the key issue of rising social inflation and how insurers are navigating the current climate. Insurers have called into question the exponential rise and aggregation of related abuse claims in a short period, saying that while they seek to compensate legitimate victims appropriately, they have no choice but to challenge the validity of claims that lack information and request discovery from plaintiff attorneys. At the same time, the plaintiffs’ bar has used advertising and technology to encourage outsized verdicts. Litigation funding also has come into play as outside investors pay claimants’ legal fees for a share of the potential award. Given the sensitivity of the accusations, even claims that lack merit could result in outsized verdicts, according to the commentary.
Social inflation has impacted nearly every insurance company in recent years. As a result, companies are sharpening their risk controls and maximizing their claims management with proactive strategies and innovative analytics.
Published reports indicate that the Boy Scouts of America and The Hartford Financial Services Group, Inc. may be nearing agreement on a revised settlement agreement. The next hearing in the case is expected on Sept. 21, 2021.
To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=312359.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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