[[Actuarial Notes Wiki|Wiki]] / [[Exam 5 (CAS)]] / **Legal Environment** ## Definition ==Legal Environment== refers to the legal and regulatory climate affecting claim costs, including court interpretations, jury award levels, attorney involvement, and legislative changes. ## Factors - Jury award trends - Attorney involvement rates - Court interpretations - Legislative changes - Regulatory environment - Statute of limitations - Joint and several liability rules ## Impact on Reserving ``` Changing legal environment can cause: - Higher/lower severity trends - Longer/shorter tail - Different development patterns - Need for environmental adjustments ``` ## Examples - Tort reform reducing awards - Expanded liability interpretations - New legal theories - Changed negligence standards ## Related Concepts - [[Loss Trend#Definition]] - [[Social Inflation]] ## References - Friedland, Chapter 1