US Insurers Suffered Most From Inflation

An analysis of insurers’ costs from 2018 through 2022 by the Insurance Information Institute finds that US insurers have been harder hit by inflation than insurers in the EU, Canada, Japan, Korea and the UK. The analysis focused on the relationship between overall inflation and replacement costs for property and casualty insurers. The U.S. had a cumulative inflation rate of more than 20 percent. The EU’s was slightly less. Japan’s rate was at the bottom, at 3.3 percent. The US also had the highest cumulative inflation rate increase for insurance replacement costs, 30.4 percent. Economist and data scientist Michel Léonard of the Insurance Information Institute said the analysis provides a framework for optimizing insurance capital allocation “by seeking uncorrelated underlying economic fundamentals and insurance performance metrics.”