Annualized inflation in the U.S. topped 5 percent just once since 1981—until now.
In the UK, it exceeded 3 percent only rarely since 1992, and only ever by a fraction.
In France, the change in the cost of things has been even more stable during the past three decades, but inflation is back.
Executive SummaryInflation creates an extra source of uncertainty for P/C insurers setting loss reserves for incurred claims. And insureds face higher premium costs as inflation gets factored into insurer pricing calculations. Both impacts are gone when parametric insurance policies replace traditional offerings, Lockton’s Peter Rapaciewicz reveals here.After a detailed discussion of inflations impacts on carriers and customers alike, Rapaciewicz explains that because financial loss is not directly relevant under a parametric insurance policy, neither premiums nor claims for such policies are impacted by inflation.
