The study analysed the relationship between overall inflation and insurance replacement costs for property and casualty (P&C) insurers in six major insurance markets worldwide. The period from 2018 to 2022 was examined, covering Canada, the European Union, Japan, Korea, the UK, and the US.
The report revealed that the US had the highest cumulative inflation rate of 20.7% over the five-year period, followed closely by the EU with 20.3%, the UK with 17.7%, and Canada with 17%. Korea and Japan had the lowest rates at 11.9% and 3.3%, respectively.
Furthermore, the US experienced the highest cumulative inflation rate increase for insurance replacement costs during the same period, reaching 30.4%. The analysis showed that property replacement costs in the US, Canada, and Japan outpaced overall inflation, while the UK, the EU, and Korea saw overall inflation surpassing increases in property replacement costs.
Insurance and inflation
The report also highlighted varying degrees of correlation between the US, Canada, the UK, and the EU, while Japan and Korea exhibited no correlation with each other or with any of the other countries.
In terms of auto replacement costs, the US, UK, Canada, and Japan witnessed cumulative increases higher than overall inflation. Conversely, the EU experienced higher overall inflation compared to increases in auto replacement costs, while Korea saw auto replacement costs rising less than overall inflation.
Triple-I’s chief economist and data scientist, Michel Léonard, emphasised the importance of quantifying the relationship between inflation and insurance replacement costs on a global scale.
“This International Insurance Society executive briefing is one in a series from experts such as Dr. Léonard on issues that reflect the priorities across the global industry,” said IIS president Josh Landau. “These briefings provide valuable analyses that help inform decisions and shape solutions for insurers worldwide.”
The report serves as an executive briefing conducted on behalf of the International Insurance Society (IIS), with Triple-I and IIS affiliated with The Institutes. IIS President Josh Landau highlighted the value of these briefings in providing analyses that inform decisions and shape solutions for insurers worldwide.
