Despite inflation and price gouging, the seasonal severity of extreme weather has an impact on rates.



Even as the country battles wildfires and prepares for yet another above-average hurricane season, losses from the winter storm that tore through the southern United States earlier this year continue to dominate the worries of property and casualty insurers.


According to Dr. Michel Léonard, CBE, Triple-I vice president and senior economist, Uri wouldn’t necessarily have an influence on premium prices on its own.

What counts is the overall impact of extreme weather events over the course of a year or a particular hazard season.


According to Dr. Léonard, higher-than-average hurricane and wildfire seasons, along with Uri, will probably cause an increase in the cost of property insurance in 2021, “before and regardless of inflation.


According to Léonard, “Actuarial models typically keep inflation and natural catastrophe losses distinct and combine them in the final step of rate projections.”



According to him, the following three 2021 developments together will exert strong upward pressure on insurance prices in 2022:


Winter storm, hurricane, and wildfire combined natural disaster losses in 2021 are anticipated to exceed annual averages;


The United States is presently expecting its 2021 overall inflation rate to be between 4% and 6%, the highest in a decade; in addition, industry-specific inflation for construction materials and labor is expected to be higher than the country’s average owing to COVID-19 supply-chain disruptions.


According to Léonard, there are a few instances where extreme weather occurrences directly cause increases in replacement costs, which have an effect on rates.

But ‘price gouging’ shouldn’t be mistaken with inflation; this is what happened after Uri.

It is transient, whereas inflation nearly usually persists.