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• iNED Forum - Inflation: Current Outlook and Implications for Reserving and Pricing

Whilst social inflation has been an ever present issue for reserving and pricing in casualty lines, in 2022 global general inflation rose to levels not seen in the West for many decades, bringing the inflation issue centre stage for every business line. Today, there is a belief that general inflation has peaked. However, this still leaves complex issues for Boards in considering whether and how rapidly inflation. will return to the central banks’ 2% target and the attendant implications for reserving and pricing.

In this Forum, Tera Allas, Director of Research and Economics in McKinsey’s United Kingdom and Ireland office, will provide a view of the current outlook for inflation in the USA, EU and UK, as well as the key macroeconomic drivers and indicators which Boards should focus on in assessing how this current outlook might change. Kevin Powell, UK Chief Actuary of Aspen will address reserving with a particular focus on the questions iNEDs should be asking of their reserving actuaries. Our third speaker, Jon Perkins, Group Chief Actuary of Chaucer Group, will address the issues heightened inflation  poses in making pricing decisions for different business lines.    

Learning objectives

Participants should be able to:

• Summarise the latest view of general inflation’s medium term trajectory across the USA, EU and UK

• Identify the key indicators which could signal changes in the expected trajectory

• Articulate the key questions to pose to reserving actuaries regarding the inflation assumptions underpinning their reserve recommendations and sensitivities

• Describe how loadings for future heightened inflation can be determined and incorporated into pricing decisions.