Swiss Re: Non-Economic Factors Drive About Half of UK Liability Claims Growth, and Litigation Funding Reform Could Add More

Liability insurance claims in the United Kingdom have been growing faster than the wider economy, and a new report from the Swiss Re Institute says a large part of the reason is legal rather than economic. The report, titled "High U.K. Liability Claims Growth Could Increase Without Balanced Reforms," was reported by Claims Journal on October 16, 2026. This article summarises the findings as reported. We have not seen the full report, so details beyond those listed here, including the methodology, should be checked against the Swiss Re Institute's own publication.

The central finding is that non-economic factors account for roughly half of the growth in UK liability claims over the last six years. In 2024 alone, according to the report, these factors added between 5 and 6 percentage points to claims growth. That year was the fifth in a row of what Swiss Re calls elevated liability excess inflation. Excess inflation means growth in claims costs above general price inflation, so the term describes costs rising faster than prices in the economy as a whole. The analysis uses a liability excess inflation index covering UK risks located domestically, and the report says the UK has experienced faster liability excess inflation than some other European markets.

What are the non-economic factors? Swiss Re names three groups: changes in laws and legal procedures, the growth of litigation funding, and shifts in claimant behaviour. Litigation funding is the practice where a third party pays the costs of a legal case in exchange for a share of any award. It can widen access to justice for people who could not otherwise afford a claim, but it can also increase the number of claims and the amounts sought, because funders are looking for a return. Claimant behaviour refers to a greater willingness to bring claims. In the insurance industry, this combination of legal and social forces is often called social inflation, although the Claims Journal summary does not use that term.

The report puts particular emphasis on two possible reforms. The first concerns litigation funding. In 2023, the UK Supreme Court's decision in R (PACCAR Inc) v. Competition Appeal Tribunal made certain litigation funding agreements unenforceable, because it found that agreements in which funders took a percentage of the damages were a type of damages-based agreement that did not comply with the rules. The UK government has committed to reversing that ruling through legislation. Swiss Re expects that reversing it would lead to an increase in litigation, as it would restore a financing model that funders favour.

The second concerns collective actions. A review of the rules for consumer class actions is considering opt-out inclusion, in which people are automatically included in a claim unless they choose to leave. According to the authors, this could increase the number of claimants and make litigation funding more attractive. Swiss Re estimates that third-party-funded litigation involving collective redress could generate £11.9 billion, or $15.7 billion, of costs and compensation for UK businesses. That figure combines compensation to claimants and the costs of running cases, and it is an estimate, not a forecast of what insurers will pay.

The title of the report points to a balance. The authors do not argue against reform in itself, and they note that access to justice matters. They suggest safeguards to accompany any changes: transparency about who is funding litigation and on what terms, giving claimants control over settlements, and encouraging alternative dispute resolution, which means resolving disputes by mediation or arbitration rather than a full trial. The aim of these measures is to limit costs that do not benefit claimants while keeping the system open to people with valid claims.

What does this mean for businesses and insurers? For insurers, rising and uncertain liability costs affect how they price and reserve for general liability, employers' liability and professional indemnity policies. Reserves are the funds set aside for future claims, and if claims develop worse than expected, insurers have to add to them. Our coverage of the US market this month, including the S&P Global Market Intelligence analysis showing other liability loss ratios at a 24-year high for a first quarter, shows that similar pressures are present elsewhere. For businesses, the practical effect is likely to be higher premiums or tighter terms for liability cover, particularly in sectors that are exposed to collective claims such as consumer-facing industries, technology and financial services.

There are limits to what can be drawn from the summary. The report is an industry research publication, and Swiss Re is a reinsurer with an interest in the way liability claims are priced. Other analysts, including claimant representatives and funders, may argue that litigation funding has improved access to justice and that increased claims reflect real harm. The report's index and estimate depend on assumptions that the summary does not set out. A careful reader should therefore treat the numbers as one view in a continuing policy debate.

The legislative timetable is not given in the Claims Journal article. Readers who follow the issue should watch for the government's bill to reverse the PACCAR decision and the outcome of the review of collective action rules, because those decisions will determine whether the risks described here materialise.