Nordic insurers deft at jumping the gun in race against inflation

Non-life insurers in the Nordic regions may be better positioned than others to weather claims inflation as stronger pricing policy has outstripped a tamer inflationary curve, analysts have said in a note to equity markets.

Nordic carriers like Sampo, Tryg, Topdanmark and Gjensidige, enjoy a “persistent rational pricing environment, which accommodates price increases in line with and even ahead of claims inflation,” analysts at the Berenberg investment bank wrote in research to equity investors. Margins, in turn, should “remain robust” through 2022.

Industrial and commercial market hardening is especially noteworthy, Berenberg analysts Tryfonas Spyrou and Kathryn Fear said of their read of management comments in Q4 earning calls. Price increases in those lines are beating claims inflation ranging 3 to 7%, versus rates largely matching claims inflation in retail lines.

Inflation remains a hot topic, albeit less burdensome to carriers than in the US or UK, analysts noted. Building materials prices may have peaked in Norway but continue to “grind higher” elsewhere in the Nordic region.  Buildings materials inflation is tempered by the roughly 70/30 labour to material split in property repair costs for the region.

The claims side of the equation brings some pressure from winter storms Malik and Eunice as well as the unwinding of the Covid-19 frequency benefit, analysts noted.

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