Analysis: The inflation challenge

The ever-increasing rate of inflation in the UK and certainty of more to come has led to warnings of challenges for brokers and insurers alike with issues ranging from difficult conversations on premium rises to underinsurance and the prospect of turning to unrated providers. Emmanuel Kenning reports.

The Consumer Prices Index measure of inflation hit 6.2% in February its highest level in 30 years. The Bank of England had forecast at the start of February that it will reach 7.25% this year before falling back to around 2% in a couple of years. In mid-March it revised the forecast to “around” 8% in the second quarter and “perhaps even higher later this year” (see graph, below).

In February Allianz UK CEO Colm Holmes warned: “Inflation is probably the big factor in the rating environment in