Triple-I: 2023 Insurer Economic Performance Tied to Broader Trends


For Immediate Release
New York Press Office: Loretta Worters, 917-208-8842,



NEW YORK, Jan. 19, 2022—The underlying economic growth of U.S. auto, home, and business insurers is likely to increase faster than the rest of the U.S. economy in 2023, according to the Insurance Information Institute’s (Triple-I) just-released Insurance Economic Outlook.


“The timeline of any recovery in insurance underlying growth will be dictated by Federal Reserve monetary policy and any shift away from tightening rates,” said Dr. Michel Léonard, Chief Economist and Data Scientist, Triple-I. “As certainty over the timing of this change firms up, the cost of mortgages and other consumer loans will decrease, fueling underlying growth, especially for homeowners and personal auto.”


“Even though we expect economic fundamentals to improve throughout 2023, line-specific underwriting considerations will continue to depress performance,” noted Léonard. “For example, we expect personal auto underwriting trends, including adverse frequency and severity, to continue into 2023.”  Insurers underwrite specific risks, in various business lines, to charge the policyholder an appropriate premium for assuming the risk.


Insurer economic growth had generally been tracking below the nation’s overall Gross Domestic Product (GDP) since the start of the pandemic in 2020.  Triple-I, however, expects insurer underlying growth in 2023 to catch up on overall GDP, ending the year at around 3 to 3.5 percent, whereas the broader U.S. economy is forecast to grow at a rate of 3.2 percent this year, up from 2.6 percent in 2022.


Property/casualty (P/C) insurer replacement costs are projected to increase between 4.5 percent and 6.5 percent year-over-year in 2023.  P/C insurers are generally defined as those offering auto, home, and business insurance coverage. “This is an improvement from 2022’s 8.1 percent and 2021’s 11.8 percent year-over-year increases,” Léonard said, noting that various P/C replacement costs increased upwards of 25 percent since 2020. “We are cautious about forecasting any reductions in inflation and replacement costs in 2023 because of ongoing heightened geopolitical risks and their impact on global supply chains and commodity prices,” he said.


Should replacement cost increases subside this year, it will benefit homeowners and personal auto insurers the most, followed by commercial property and commercial auto insurers.  Used autos, new vehicles and construction materials experienced the steepest rise in prices in recent years amongst a basket of key goods replaced or repaired by P/C insurers. 


Triple-I expects 2023’s economic narrative to focus in Q1 on inflation, interest rates and recession, but gradually shift from Q2 to Q3 to the timing of a recovery and a more neutral monetary policy in Q4, depending upon the Federal Reserve’s actions.


Economic growth, however, will not be steady throughout the year. “Economists expect the Fed to tighten further in Q1 2023, likely pushing the U.S. economy into a recession in either Q1 or Q2.  As such, we expect growth in the first half of the year to be significantly lower than in the second half of the year,” said Léonard.


“Growth remains constrained below full potential by monetary policy and geopolitics. The length or depth of any recession in 2023 and the timing of any recovery in 2023 or 2024 will be determined by whether the Federal Reserve shifts from tightening to neutral to accommodative,” said Léonard. “Current expectation is that tightening will continue through at least Q1 and Q2 before shifting to, at best, neutral as the year progresses, with no easing on the table for 2023.”   


The U.S. Consumer Price Index (CPI), which measures the inflation rate, ended 2022 at 6.5 percent year-over-year, down from a high of 9.1 percent year-over-year in June 2022. Triple-I expects inflation to continue to decline throughout 2023. “Our base forecast, driven primarily by domestic economic considerations, is for CPI to end 2023 between 3 percent and 4 percent year-over-year.  However, improvements will not be steady throughout the year. Looking at each quarter, we expect inflation to be down in Q1, flat or slightly up in Q2, and down in Q3 and Q4,” Léonard said. “The pace and extent of any inflation slowdown are predicated on improvements in global geopolitical risk outside the purview of domestic monetary policy.” 


For more information, Triple-I members can access the Triple-I’s Economic Dashboard, available at the organization’s members-only website. The Dashboard’s ongoing updates allow insurance industry professionals to follow key economic reports (e.g., federal governmental updates on interest rate, unemployment, and housing trends) in real time, adjust forecasts, and recalibrate strategy. Each quarter, the Triple-I’s Outlook provides a road map about which key economic reports will most impact insurance industry performance.




Video:  Triple-I Insurance Economic Outlook—January 2023  

Back to top