The Devastating $30 Billion Impact Inflation Is Having On Your Insurance

Experts at McKinsey & Company estimate that inflation pushed loss costs for property/casualty insurers up roughly $30 billion last year, with nearly three-quarters of that figure coming through personal lines.

Focusing on the amount an insurer must pay to cover claims, its loss costs, the authors estimated that rising prices drove an almost $22 billion increase in personal lines loss costs in 2021, over and above historical loss trends. For three commercial lines—workers comp, commercial multiple peril and commercial auto—the 2021 impact of cost inflation was roughly $8 billion, they estimated. While the dollar impacts for the longer-tail commercial lines are smaller than for personal lines, a chart showing the percentage impact on each line reveals a 16 percent impact for workers comp.

Neither set of figures—the dollar or the percentage impacts on loss costs—gauge the further impacts of inflation in 2022. the impacts will be much bigger.

Breaking Down Inflation’s $30B Impact on Insurers Line By Line

Explaining the high impact of inflation on personal auto for both years, they note jumps in prices of motor vehicle parts and equipment between June 2021 and June 2022, and supply chain disruptions impacting the physical damage coverage part.

To manage such costs effectively, insurers will need to focus on increasing claims productivity and automation and improving or repairing managed-care network utilization and negotiated pricing while also balancing cycle time improvements with claims accuracy,” they write.

Now may be a good time to accelerate innovative loss prevention capabilities through in-home Internet of Things applications, automotive telematics (such as vehicle tracking) and workplace monitoring,” they advise in the section devoted to chief claims officer responses.

Sherry BermanSherry Berman
17:55 08 Dec 22
We just moved over to e3 with Chris Stone, 1 1/2 years ago. Our house flooded during snowmeggedon in Texas last February. The insurance companies were overwhelmed with phone calls from Texas. Our insurance company was not responding to us on a timely basis, and because of the supply chain shortage, we knew we needed to act quickly. Chris knew who to talk to at our insurance company, and was a total advocate for us and made sure that our needs were being taken care of. Our last insurance agent was the advocate for the insurance company, not us. Chris knows the business inside out. He guided us along the process of what to do. e3 represents many different insurance companies, which gives Chris the ability to guide you into the best policy that meets your needs. He explains the insurance lingo in layman terms, and makes sure that you and your family are protected. My husband and I totally trust Chris to give us the best policy with in our budget.
Andy BermanAndy Berman
21:56 07 Dec 22
e3 Insurance and Chris Stone are simply the best!! After experiencing a flood in our house and a total redo necessary, Chris made the experience completely seamless!! There simply is no one better!!
Alex ThipkhosithkunAlex Thipkhosithkun
19:32 03 Nov 22
I can't say enough good things about Chris at e3 Insurance. He really is an expert in his field and was really helpful and thoughtful through my home and car insurance purchasing experience. But it doesn't stop there. Recently, I was facing a relatively stressful plumbing situation with my newly purchased house and after talking to Chris and putting me in contact with the right people, they had someone come out THAT afternoon-- Amazing!
Austin SandozAustin Sandoz
14:45 06 Oct 22
Chris was a client of mine for a long time. When I reached out to get a quote I was blown away. I found out my brand-new 2022 Jeep was severely underinsured and I had little to no protection for my assets.After comparing my old policy side by side with my new policy he was able to quadruple my coverage and protect my assets for LESS than what I was paying before. When it's done right, it's done right.
Sheryl KlousiaSheryl Klousia
14:29 06 Mar 22
Chris has been extremely helpful in finding us great policies for house and car insurance. He reviews our policy yearly to ensure we are getting the best rate and best coverage… and recommends changing when needed. We are very satisfied with his service… he has saved us so much over the 3 years that we have been with him ! So glad we found him. Our kids all use his services also !

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