General liability: A look at some growing and emerging trends

The evolving landscape of general liability issues might suggest a rocky road ahead for businesses, but that doesn’t have to be the case. Staying on top of trends impacting claims severity and losses – and keeping your coverage up to date in light of those trends – puts you in the best position to help shield your company from the often blustery winds of change.

Many issues influencing general liability claims mirror ongoing changes in the world at large, from an increasingly litigious society to our unparalleled pace of technological advancement. Let’s break down some of the key growing and emerging trends.

 

Litigation funding

At one time, legal fees could be a disincentive for bringing questionable cases to trial. The growth of litigation funding (i.e., outside investors fronting legal fees for a percentage of settlements and judgment payments) can remove that disincentive. While litigation funding is certainly a resource used in legitimate cases, it can encourage parties to reject reasonable settlements or demand costly and even unnecessary medical treatment. Attorneys less reliant on clients’ ability to pay may also pursue litigation they otherwise might have avoided.

 

Escalating verdicts

We’ve all heard news stories about what seem like astronomical sums awarded to plaintiffs during jury trials. While some of those record payouts are reduced considerably – or even reversed – on appeal, the publicity surrounding these cases can encourage plaintiffs and attorneys hungry for a lottery-like verdict in the millions or billions. The big dollar signs in headlines can overwhelm the context and complexity of cases.

 

Rising healthcare costs

The United States spends more on healthcare than any other developed country¹ and that spending is expected to grow at annual rate of 5.5% until 2027.² Advancements in technology and medication can improve patient care, but also increase treatment costs for certain injuries. Some attorneys also strategize with clients to find ways to avoid using available health insurance to potentially reduce treatment costs, allowing them to show more monetary impact in injury-related trials.

 

Medical management challenges

Insurance providers don’t have control over medical treatment choices and authorizations, so the costs of general liability claims are much harder to gauge (as opposed to a workers’ compensation claim). The inclusion of medical experts in claims allegations also raises the costs of legal proceedings.

 

Violent acts

One of the most heartbreaking developments of recent years has been the disturbing increase in the number of mass shooting incidents.³ As “active shooter” has become part of our everyday lexicon, it has also grown in its impact on insurance. In the aftermath of the tragedy in Las Vegas at the Route 91 Harvest Country Music Festival in 2017, many event venues felt the need to increase liability coverage to address their risk and readiness. Incidents like this at public events also have a high media profile, which can lead to a greater number of claimants and increased costs for legal defense.

 

Technology

There is hardly an aspect of living today that isn’t being altered by rapid technological change, from the development of self-driving vehicles to the disruptive impact 3D printing will have on everything from manufacturing to pharmaceutical production. Artificial intelligence, drone use, wearable tech and the connected “internet of things” all present different and constantly shifting risks that go hand-in-hand with improved efficiency and convenience. Data and privacy breach stories make the big headlines, but reputational damage can come from something as simple as a viral video showing a business in a bad light.

 

The sharing economy

A broad term for several different business models, the sharing economy includes crowdfunding campaigns (Kickstarter), car-sharing services (Uber/Lyft), peer-to-peer investing enterprises, apartment/house-sharing platforms for travelers (Airbnb, Vrbo), and even something as basic as reselling your own items online. Many of these models offer great opportunities for businesses, customers and employees, but there is often a lack of clarity on coverages compared to more traditional business operations. It’s vital that those steering shared-economy businesses work with insurance providers to find the best solutions to an often gray area of liability risk.

 

1 Organisation for Economic Co-operation and Development (OECD). Health spending (indicator). 2019. Accessed on 19 April 2019.
2 Sisko, Andrea M., et al. “National Health Expenditure Projections, 2018–27: Economic And Demographic Trends Drive Spending And Enrollment Growth.” Health Affairs. 20 February 2019.
3 Arthur, Rob. “No Matter How You Measure Them, Mass Shooting Deaths Are Up.” FiveThirtyEight. 7 November 2017.