A new Insurance Information Institute (Triple-I) study has suggested that the economic drivers of the U.S. P/C insurance industry could cumulatively expand faster than the nation’s gross domestic product (GDP) in 2024 and may outperform the overall U.S. economy by 2025.
According to Michel Léonard, Ph.D., CBE, chief economist and data scientist, Triple-I, “Growth drivers specific to P/C performance have been improving faster in 2023 than the rest of the U.S. economy, after underperforming the wider economy three years in a row.
“We forecast P/C growth of 2.1% in 2023, slightly above our earlier expectation of 1.9%.
“This confirms our expectation from January 2023 that the gap between P/C and overall growth would continue to narrow this year. P/C underlying economic growth should continue to improve over the next three years, potentially outperforming the wider economy by 2025.”
Triple-I noted that between 2020 to 2023, P/C replacement costs increased an average of 45% whereas inflation for the overall U.S. economy increased 15% within that same timeframe.
The firm’s study explained that increases in P/C replacement costs should continue to slow down faster than overall inflation over the next three years. However, it will take 10 years of normal inflation for insurance replacement costs to process pandemic-related increases.
