The insurance industry appeared poised for growth heading into 2022 but unanticipated global unrest and inflation helped spoil conditions. As Conning considers the year ahead, we again see a number of factors supporting expectations for industry growth.
As we note in the December Conning Commentary, the outlook for GDP growth and continued strong levels of employment are positive for premium growth. Inflation is increasing expenses, but also enabling P&C insurers to raise rates. Higher interest rates are, finally, bringing some relief to life-annuity insurers who have struggled to find yield during a prolonged low-interest rate environment. Consumers and businesses have clear needs for additional coverage.
Nevertheless, challenges remain: volatile equity markets have hampered company valuations and individual retirement savings. A recession in 2023 could create headwinds. And the industry must continue to modernize its use of technology.