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For Immediate Release
New York Press Office: Michael Barry, 917-923-8245, michaelb@iii.org

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NEW YORK, March 30, 2023—Slow underlying growth and inflation are among the biggest challenges facing U.S. auto, home, and business insurers, according to the (Triple-I’s) Q1 2023 Economic Outlook.

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The Outlook’s key takeaways are below:

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• Property/casualty (P/C) insurance, a category which includes U.S. carriers who underwrite auto, home, and business coverage, saw its cyclical underlying growth rebound fail to materialize in 2022’s second half as interest rate tightening depressed housing starts, corporate spending, and vehicle expenditures.
• Increases in P/C replacement costs (e.g., vehicle parts, housing construction materials) slowed down over 2022’s last two quarters but are up 40 percent since 2019.
• U.S. Gross Domestic Product (GDP) growth is likely to remain depressed for at least the next two quarters after the Federal Reserve shifted away from its hawkish stand on interest rates; the Fed’s three-year Consumer Price Index (CPI) expectations remain overly optimistic, Triple-I believes.

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P/C Underlying Growth and Replacement Costs

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“We expect long-term growth to remain below 2 percent and long-term inflation to remain above 2.5 percent,” said Dr. Michel Léonard, CBE,��Chief Economist and Data Scientist, Triple-I.�� “A recovery by year-end 2023 remains unlikely as the Fed continues its hawkish policy and bond yields increase.�� However, the Consumer Price Index is likely to decrease as pandemic supply chain disruptions ease, and commodity and energy prices reach a precarious war-time equilibrium.”��

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U.S. GDP Growth and Inflation

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The Triple-I is slightly more optimistic than the U.S. Federal Reserve when it comes to the U.S. Gross Domestic Product (GDP), forecasting the nation’s GDP to grow slightly above Fed expectations between 2023 and 2025.��

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The macroeconomic fundamentals for P/C insurers are forecast to be mixed for the balance of this year, according to Triple-I’s analysis.

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“Property and casualty insurer net premiums written are forecast to continue to grow due to hard market conditions regardless of slowing underlying growth,” said Dale Porfilio, Chief �������� Officer, Triple-I.�� “Underwriting losses, however, are expected to persist, driven by challenging results in personal lines.”��

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Net premiums written are premiums written after reinsurance transactions. A hard market is a seller’s market. It describes an environment is which insurance is expensive and in short supply.

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The full report is available to Triple-I member companies only. Triple-I subject matter experts are available, however, to discuss the Q1 2023 Economic Outlook’s main findings.

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RELATED LINKS:

Triple-I Blog: ���������������������������� Joint Industry Forum 2022: Combined Ratio Takes Center Stage

Triple-I Publication:�������� A Firm Foundation: How �������� Supports the Economy

Triple-I Report:���������������������� Triple-I/Milliman �������� Economics and Underwriting Projections: A Forward Look

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