In Triple-I’s April 2024 Outlook, Michel Léonard, Ph.D., CBE, chief economist and data scientist, highlighted the remarkable growth trajectory of the U.S. property/casualty (P/C) insurance industry. Léonard noted that P/C underwriting growth has surged past the nation’s Gross Domestic Product (GDP), with further acceleration anticipated, particularly if the Federal Reserve enacts monetary rate cuts.
“Our projections have consistently indicated that P/C underwriting growth would eventually outpace overall GDP growth, and recent trends validate this expectation,” stated Léonard. Triple-I’s forecast indicates a robust P&C underlying growth rate of 3.4% in 2024, surpassing the Fed’s GDP forecast of 2.2%. This economic surge is projected to persist, with P&C underlying growth expected to exceed GDP growth through 2025 and 2026, averaging 2.0% higher over the next three years compared to overall U.S. growth.
However, Léonard cautioned that various economic stress scenarios could affect the spread between P/C underlying growth and overall GDP growth. Factors such as the Fed’s monetary policy shifts and geopolitical risks, including global supply chain disruptions, could alter this trend.
In comparison to the Fed, Triple-I maintains a more optimistic growth outlook due to differences in their economic models. Triple-I’s forecast for overall GDP growth in 2024 stands at 2.6%, exceeding the Fed’s projection of 2.2%.
Léonard emphasized that a potential decision by the Fed to reduce interest rates in 2024 could further bolster key insurance underwriting sectors like housing and auto sales, providing an additional boost to the industry’s growth trajectory.
