The payments of claims always reflect the cost level at the time of the final settlement. Single claims,
which are finalized in different years, can not be compared with each other. Generally the price levels for adjusting claims change over time.
Usually inflation is measured by the price development of a defined portfolio of common goods. In addition to general cost increases which
affect each claim equally, liability claims are subject to a further systematic price increase, called social inflation.
Social inflation describes those price increases arising from the changing socio-economic environment. The main causes of this are increased jury awards,
more liberal treatment of claims, legislated increases in benefit levels and new concepts of tort and negligence that emerge to increase insurance losses.
In the DATA LOUNGE
these effects can be predicated into an annual price surcharge.