Inflation zeroes in on personal lines for 3/4 of added claims impact
Personal automotive accounted for nearly half of the run up in insurance claims costs that can be attributed to just inflation and homeowners delivered another quarter, analysts at McKinsey have claimed.
"Our estimates show that rising prices contributed to an approximately $30 billion increase in loss costs—the amount an insurer must pay to cover claims—in 2021, over and above historical loss trends," authors wrote.
Of the sum, McKinsey attributes a full $13.9 billion to personal auto, including $9 billion for just physical damage, all ahead of $7.9 billion for homeowners. All told, the two personal lines took 73% of the inflationary impact on claims.
"Price increases have been exceptionally high for the goods and services that drive personal insurance claims."
Commercial lines have escaped the inflation noose. Commercial multi-period is said to have suffered $2.3 billion in added loss cost from 2021 inflation and commercial auto $2.0 billion.
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