“Since 2018, US insurers have paid more than their global counterparts to repair and rebuild damaged properties and vehicles,” according to the Insurance Information Institute (Triple-I).
The US insurance information source made the affirmation in an ‘Inflation and Insurance Replacement Costs’ executive briefing, conducted on behalf of the International Insurance Society (IIS).
It found that the continuing rise of inflation has increased the amounts that US insurers are having to pay out for claims.
Triple-I’s report analysed the relationship between overall inflation and insurance replacement costs for property and casualty (P&C) insurers in the six largest global insurance markets between 2018 and 2022. These markets are Canada, the EU, Japan, Korea, the UK and the US.
Within the five-year timeframe, Triple-I found that the US experienced the highest cumulative inflation rate at 20.7 per cent, followed by the EU, at 20.3 per cent.
Additionally, the US also saw the highest cumulative inflation rate increase (30.4 per cent) for insurance replacement costs between 2018 and 2022.
With more than 50 insurance company members, Triple-I’s offers insights into residential and commercial property insurance trends as well as those identified by personal and commercial auto insurers.
Commenting on the findings, Dr Michel Léonard, data scientist at Triple-I, says: “Quantifying the relationship between inflation and insurance replacement costs across national and regional P&C/non-life insurance markets can provide an additional framework to maximise insurance capital allocation. This includes reinsurance capacity, by seeking uncorrelated underlying economic fundamentals and insurance performance metric.”
Josh Landau, president of the IIS, adds: “This IIS executive briefing is one in a series from experts such as Dr Léonard on issues that reflect the priorities across the global industry. These briefings provide valuable analyses that help inform decisions and shape solutions for insurers worldwide.”
