As well as making sure they have strong solvency ratios, insurers are combatting claims inflation by settling claims quickly, negotiating fixed price contracts for repairs and labor, and putting in place infrastructure to keep close track of their claims inflation." Photo: Ratana21 – stock.adobe.com
Earlier this year, the Bank of England warned that claims inflation will affect all general insurance firms, and urged the U.K. insurance sector to ensure they have sufficient reserves.
In a letter to the chief actuaries of general insurance companies, the Bank said: "There is a risk that persistently elevated claims inflation might result in a material deterioration of solvency coverage for some firms unless they take appropriate mitigating actions."
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