For insurers, Triple-I Study Projects “Constrained” Growth in 2021

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Credible economists have never diverged so widely in their economic outlooks as they have in 2021, according to Dr. Michel Léonard, head of Triple-Economics I’s & Analytics division. This is true for everything from financial economists’ optimistic growth forecasts early in the year to central bankers’ use of the term “transitory” inflation to push back against the Federal Reserve’s “tapering.”

 

Vice President, Senior Economist, Data Scientist, and Head of Economics and Analytics Michel Léonard

 

Soft Landing, Headwinds and Rebound, Triple-fourth-quarter I’s insurance economic outlook report, was written by Leonard.

The quarterly report is a companion piece to Triple-Insurance I’s Economics Dashboard and is only accessible to Triple-I members at economics.iii.org.

Contact Deena Snell if you’re interested in learning more about membership.

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Broad economic growth drivers are translated into words unique to each company line by Triple-study. I’s

Léonard claims that even though the insurance sector is anticipated to grow by 3.4 percent in 2021, it will fall short of the 5.8 percent growth in the U.S. GDP as a whole because it is “constrained by its ties to industries with growth rates significantly below and inflation rates significantly above the U.S. rates overall.”

 

The research states that when prices for the majority of products in the consumer supply index (CPI) trended lower and total inflation peaked at 4% in the second half of 2021, worries about “runaway inflation” diminished.

 

As a result of poor underlying growth and high line-specific inflation, the Triple-I study forecasts an increase in the combined ratio and a decline in underwriting profitability for the insurance sector.

The industry’s investment returns in 2021 are expected to outpace those in 2020, notwithstanding challenges.

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