What are the most pressing challenges facing US insurers today?
Additionally, P&C replacement costs, such as vehicle parts and housing construction materials, have slowed down over the last two quarters but are still up 40% since 2019.
Triple-I’s chief economist and data scientist, Dr. Michel Léonard, CBE, said long-term growth would likely remain below 2%, while long-term inflation would stay above 2.5%.
“A recovery by year-end 2023 remains unlikely as the Fed continues its hawkish policy and bond yields increase,” Léonard said. “However, the Consumer Price Index is likely to decrease as pandemic supply chain disruptions ease, and commodity and energy prices reach a precarious war-time equilibrium.”
In terms of GDP growth, Triple-I was slightly more optimistic that the Federal Reserve, forecasting that the nation’s GDP would grow slightly above Fed expectations between 2023.
The macroeconomic fundamentals for P&C insurers are also expected to be mixed for the rest of the year, according to the Triple-I report.
“Property and casualty insurer net premiums written are forecast to continue to grow due to hard market conditions regardless of slowing underlying growth,” said Dale Porfilio, Triple-I’s chief insurance officer. “Underwriting losses, however, are expected to persist, driven by challenging results in personal lines.”
Triple-I’s predictions for P&C insurers come after a report by Verisk and the American Property Casualty Insurance Association (APCIA) revealed that the sector saw a net underwriting loss of $ 26.9 billion, the largest since 2011.
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