CAS Research Introduces New Framework for Measuring Social Inflation
The Casualty Actuarial Society (CAS) has published “Quantifying Social Inflation in Liability Insurance with Advanced Statistical Methods,” new research that introduces a statistically rigorous framework for measuring social inflation, one of the insurance industry's most closely watched trends.
"Social inflation has been a key concern in the casualty space for the last decade, but attempts to quantify it have produced a wide range of diverging views,” said Dean Marcus, FCAS, CERA, volunteer chair of the CAS Reinsurance Working Group, which oversaw development of the research.
“This research provides a statistically robust framework for quantifying social inflation in the U.S., controlling for changes in claim mix across the distribution to uncover patterns that aren't visible in industry-level averages. Using real verdict and settlement data over the last 15 years, the authors have produced novel insights into social inflation that are already beginning to inform actuarial practice and can help support pricing, reserving, underwriting, and risk management decisions. This new research significantly advances our understanding of social inflation and is an important step toward industry convergence on this critical issue."
Defined in the paper as the increase in insurance losses driven by changes in litigation outcomes rather than economic inflation alone, social inflation is measured using more than a decade of U.S. civil litigation data. Researchers Tsz Chai Fung, Liang Peng, Fang Yang, and Lie Ma developed a statistical framework that analyzes plaintiff win rates, settlement patterns, and verdict severity while accounting for changes in case mix.
In addition to applying the methodology to real-world litigation data, the researchers also validated the model using synthetic data with known outcomes, providing confidence that the framework accurately measures the effects it was designed to identify.
The full research paper is available on the CAS Forum website. The research will also be featured in a CAS webinar on October 15, 2026, at 12:00 p.m. ET. During the webinar, one of the researchers will discuss the methodology, key findings, and practical applications of the framework for insurers and actuaries.
This research paper reflects the CAS's commitment to advancing practical, data-driven research that helps property and casualty insurance professionals navigate emerging industry challenges. Learn more about CAS research at casact.org/research.
