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<\/div>\nThe economic drivers of the U.S. property\/casualty (P\/C) insurance industry are growing faster than the nation\u2019s Gross Domestic Product (GDP) and are expected to gain further momentum in the event of Federal Reserve monetary rate cuts, according to the Insurance Information Institute\u2019s (Triple-I) latest Insurance Economics Outlook.<\/p>\n
\u201cWe\u2019ve been forecasting that P\/C underwriting growth would catch up on overall GDP and it has,\u201d said Michel L\u00e9onard, chief economist and data scientist, Triple-I.<\/p>\n
\u201cTriple-I forecasts P&C underlying growth to increase to 3.4% in 2024, 1.2% above the Fed\u2019s GDP forecast of 2.2%. It will likely take at least another year for this economic rising tide to lift the P\/C industry\u2019s overall growth and performance,\u201d added L\u00e9onard.<\/p>\n
P&C underlying growth is expected to continue outperforming overall GDP growth into 2025 and 2026, he said in the report.<\/p>\n
Comparing the P&C industry performance to the Fed\u2019s GDP forecast, underlying insurance growth is expected to outperform overall U.S. growth by an average of 2% over the next three years, the report said.<\/p>\n
\u201cDifferent economic stress scenarios may reduce or widen the spread between P&C underlying growth and overall GDP growth, or even reverse the overall trend of P&C underlying growth outperforming overall GDP growth,\u201d said L\u00e9onard.<\/p>\n
\u201cThe top two risks to underlying insurance growth and overall GDP growth is the Fed slowing or reversing course on monetary easing and renewed geopolitical risk including global supply chain disruptions,\u201d he added.<\/p>\n
The Triple-I\u2019s models are more optimistic because it puts less emphasis than the Fed\u2019s on the negative impact of each additional interest rate increase on GDP growth and the unemployment rate, the report noted.<\/p>\n
For 2024, Triple-I\u2019s forecast for overall GDP growth is 2.6%.<\/p>\n
L\u00e9onard said that a decision by the Fed to cut interest rates this year, \u201cwould provide further tailwind to key insurance underwriting growth such as housing and auto sales.\u201d<\/p>\n
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