Claims inflation will continue to impact insurers in 2023

Claims managers and underwriters alike will have challenges to address

Undoubtedly claims inflation has been a major concern for insurers in 2022, and with the current economic uncertainty, and the ongoing impact of the conflict in Ukraine, will continue to have a serious impact in the coming year. Whilst the global markets are so volatile and with ongoing geopolitical instability adding to the uncertainty, the Bank of England’s current forecasts suggest that inflation will remain high throughout 2023.

For some lines, such as motor, property and construction, the impact of inflation has been most immediate, as the supply of goods and materials and rising energy costs have had a direct impact. Other business lines, particularly those with longer tails will continue to face sustained exposure. Claims managers are increasingly having to focus on mitigating the cost of this economic environment, particularly by looking for efficiency in managing claims, and developing suitable strategies to reduce claims life cycles, whilst keeping reserves under review. Underwriting faces similar challenges, balancing premium increases with customer expectations, and the risks of undervaluation and underinsurance.

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