How are US insurers faring amid financial instability? – Report

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“The insurance industry is expected to grow in 2021, but will lag the US overall in 2021,” said report author and Triple I Vice President, senior economist and data scientist Michel Léonard, PhD, CBE.

According to the report, US GDP is expected to grow 5.8% this year. For comparison: Triple-I estimates the growth rate of the insurance industry at 3.2% to 3.4%.

Léonard, who also heads Triple-I’s business and analytics department, added that the insurance industry’s performance in 2021 will be “constrained by its links to sectors that are growing well below and inflation rates well above overall US rates” . He noted that inflation will be around 4% by the end of this year, but will be higher for items that have a direct impact on insurers, such as cars, auto parts, and building materials like wood.

The other challenge that insurers will face at the end of 2021 is a projected combined ratio of 101 at the end of the year, Triple-I said. This means auto, home, and business insurers are likely to spend $ 1.01 on claims and expenses for every $ 1 in premiums this year.

US insurers’ performance may lag a little behind the country’s GDP growth, but globally they outperform the world’s largest insurance markets. This year, Triple-I expects net written premiums in the US to increase by 7.7% from 2020 onwards. The report also identified investment income as the main source of income for US insurers, largely responsible for a 6.5% year-over-year increase. Policyholder profit for the year.

Triple-I estimates the surplus will reach about $ 900 billion.

Léonard noted that the supply chain disruptions, labor shortages and inflationary pressures in 2021 created disagreements among economists.

“I’ve never seen a situation, and neither have most of my colleagues, where credible economists who traditionally see the world the same way are so far divergent in their forecasts,” he said.