The recent fatal shooting of UnitedHealthcare CEO Brian Thompson has ignited a firestorm of negative emotions around the health insurance industry. At least one insurance leader has warned that the event could also stoke the flames of social inflation.
The shooting comes when public sentiment toward corporate leaders is already tense. Social inflation, or the rising cost of insurance claims due to societal and legal trends, has been fuelled by an increased willingness to assign blame and seek accountability from insurance companies through massive jury verdicts.
The implications of Thompson’s killing, paired with a deep public frustration over skyrocketing healthcare expenses, could spell significant challenges for businesses and high-net-worth individuals grappling with rising liability costs, according to one expert.
So-called “nuclear” verdicts – those amounting to $10 million or more – have trebled since 2020, according to Allianz Commercial.
Robb Lanham (pictured below), chief sales officer at Hub International, believes the Manhattan attack “really illustrates what’s going on” around the rise of social inflation.
“There’s widespread frustration with insurance companies and even public figures like (podcaster) Joe Rogan blasting the industry,” Lanham reflected. “When people get involved in litigation, they don’t see it as personal. It’s not their neighbor paying; they think it’s coming out of the pockets of these 'bad' insurance companies.”
Thompson was gunned down on the morning of December 4 outside the New York Hilton Hotel. He was rushed to Mount Sinai Hospital where he died shortly after, at the age of 50. Since the shocking attack, social media has erupted with posts expressing rage at healthcare insurers and solidarity with the shooter.
Lanham shared his view on the complex social factors fueling public anger at insurers: “The distrust of insurance companies plays a significant role in driving litigation. People think, ‘Why not sue the insurance company for more?’ After all, lawsuits often target entities people dislike, not individuals they sympathize with. This mindset feeds into a broader narrative about inequality.
“This dynamic is further complicated by public perceptions of the insurance industry itself. Recent headlines have amplified distrust, with stories about insurance companies leveraging AI to deny claims reinforcing the belief that these companies prioritize profits over people.
“The insurance industry, to some extent, has fueled this perception. While they are businesses trying to manage risks and offer liability policies, the impact of social inflation is undeniable. Claims have grown so costly that traditional products are disappearing.”
There were 27 verdicts over $100 million last year, with the median cost of “nuclear” verdicts hovering at around $44 million. Amid the rising cost of claims, insurers are expected to continue raising rates or to limit coverage.
“Litigation trends, massive verdicts, and public sentiment against insurance firms are creating a perfect storm for the industry,” Lanham said.
For insureds, the stakes couldn’t be higher. Insurance companies have long warned about the rising costs associated with social inflation, but the emotional volatility surrounding incidents such as Thompson’s killing adds a new layer of unpredictability.
The BBC reported that more than 100 people protested outside the headquarters of UnitedHealthcare in Minnesota earlier this year, condemning the company’s policies and denial of patient claims.
The “prior authorization” process allows insurance companies to review suggested treatments before agreeing to pay for them.
High-net-worth clients and businesses are more vulnerable to the vicious cycle of “nuclear” verdicts and rising liability insurance rates because they’re more likely to be targeted by litigation.
As for tensions between the public and the insurance industry, there also doesn’t seem to be much relief on the horizon. “I don't see social inflation cooling for a bit,” Lanham said.
What are your thoughts on the impact of social inflation on liability rates? Please share a comment below.
