Previously Covert Online Business Model Drives the Rising Litigation Frequency Impacting Commercial Auto Liability Insurance
COLUMBUS, Ohio, Oct. 22, 2026 (GLOBE NEWSWIRE) -- Joseph Petrelli, President and Co-founder, Demotech, Inc., addressed
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COLUMBUS, Ohio, Oct. 22, 2026 (GLOBE NEWSWIRE) — Joseph Petrelli, President and Co-founder, Demotech, Inc., addressed The National Association of Insurance Commissioners Northeast Zone Meeting September 2-4, 2026, in New Castle, New Hampshire to present his research on “social inflation” and “nuclear verdicts” adversely impacting the pricing and loss reserving of commercial auto liability insurance. In his address, and as published in the Fall, 2026 issue of The Demotech Difference, Petrelli describes loss costs and litigation trends as the result of a previously covert online business model that he calls “tech-enabled litigation instigation.” As such, railing against “social inflation” and increases in the cost of litigation ignore a critical root cause.
“My review of public financial information contained in Schedule P Part 5C, Commercial Automobile Liability insurance claim counts at first report, found in the annual statements of insurers writing commercial automobile liability insurance, indicated that despite the relative consistency in the number of claims reported each accident year, other than the COVID years of 2020 and 2021, the claims in the respective sections of Schedule P Part 5, i.e., reported, outstanding, closed with payment, and the calculated number of closed without payment, have been transitioning. The elongation of the commercial automobile liability insurance settlement period shows fewer claims are being paid and settled in the first year. Concurrently, a higher percentage of claims is being closed without payment and a higher percentage move forward as outstanding, implying a higher frequency of litigation.”
Petrelli also believes, “Unless and until tech-enabled litigation instigation deniers recognize the efficacy of the online business model that has increased litigation frequency, and by doing so increased litigation costs and caused social inflation, the challenges associated with promulgating realistic pricing or recording adequate loss and loss adjustment expenses cannot be resolved.”
Established in 1985, Demotech, Inc. is a financial analysis firm located in Columbus, Ohio. Demotech has served the insurance industry by providing objective and independent Financial Stability Ratings® (FSRs) for Property & Casualty insurance companies, Life & Health insurance companies, and Title underwriters, among others. As the first company to have its rating process formally reviewed and accepted by Fannie Mae, Freddie Mac, and HUD, Demotech has been leveling the playing field by offering FSRs to insurers of all sizes. As of July 11, 2022, Demotech is registered with the U.S. Securities and Exchange Commission as a nationally recognized statistical rating organization (NRSRO) in the class of ratings for insurance companies.
The latest FSRs of all entities reviewed and rated by Demotech, Inc. can be found at www.demotech.com. Information on the procedures and methodologies we utilized to determine and assign credit ratings can be found at https://www.demotech.com/wp-content/uploads/Ex2.pdf. For more information, call Demotech at 1-800-354-7207, or go to inquiry@demotech.com.
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