Triple-I: Current Slowdown in US P/C Replacement Costs Likely Short-Lived; May Grow Faster Than Overall Inflation by 2026


For immediate release 
New York Press Office, Loretta Worters 917-923-8245,   


NEW YORK, May 9, 2024 –  U.S. property/casualty replacement costs are now increasing at a slower pace than overall inflation and will likely continue to do so for the next 24 months, according to the Insurance Information Institute’s (Triple-I) latest Insurance Economics Outlook


While this slowdown in cost increases is unlikely to relieve upward pressures on insurance premiums, especially given deteriorating underwriting trends and multi-year replacement cost increases, it may alleviate some pain for carriers in the short run before overtaking overall inflation again by 2026. 


Looking at inflation, the Triple-I Outlook noted that the Consumer Price Index (CPI) is down 4.1% year-over-year. However, the CPI increased each month since the beginning of 2024, from 3.1% in January to 3.2% in February and 3.5% in March. This three-month trend is not enough to determine whether the year-over-year decline will reverse course this year. For example, the CPI increased for three out of 12 months in 2023 (from 3.1% in June to 3.7% in August, and from 3.1% to 3.3% in November) and still finished that year down from 8.0% in 2022 to 4.1% in 2023.


As of now, Triple-I expects U.S. inflation to remain flat for the rest of the year, at around 3.5% with a range of 0.4% above and below this estimate.


Replacement costs for property (e.g., construction materials, labor rates) rose 55% between 2019 and 2022, nearly four times the Consumer Price Index (CPI). It will take 10 years of normal inflation – defined as 2% per year – to absorb the pandemic era’s replacement cost increases. P/C replacement costs have grown 1.5% year-to-date in 2024, below overall inflation of 3.5%.


Lower replacement costs for motor vehicles, especially used autos, pushed replacement cost increases for commercial auto and personal auto to the lowest of the P/C lines.


“Triple-I forecasts P/C replacement costs to increase 3.2% by 2026, once again faster than overall inflation, ranging from 2.1% and 2.9% that year,” said Michel Léonard, Ph.D., CBE, chief economist and data scientist, Triple-I, in the organization’s May Outlook.


Léonard noted that this trend will likely reverse in 2026. 


“We expect P/C replacement costs to increase by 1.5% in 2024 and 2.5% in 2025, below overall inflation in both years, and increase by 3.2% in 2026,” Léonard said.


Using Triple-I’s own CPI forecast as the basis for comparison, U.S. P/C replacement costs are expected to grow below overall inflation by an average of 1.75% over the next two years. Using the Fed’s lower inflation forecast as a basis for comparison, this spread is 0.85%. This is after P/C replacement costs grew at a multiple of overall inflation during and after the pandemic.


“One caveat to the findings is a threat of resurging inflation due to geopolitical risks including Russia-Ukraine, China-Taiwan, India-China, global food prices, supply chain disruptions, trade wars, and the U.S. elections,” Léonard said.


Triple-I member companies can access the full study on the Members Only portion of the Triple-I website.

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