PRA warns insurers on claims inflation and under-reserving

The Prudential Regulation Authority has written to insurers flagging the need to monitor the hit to reserves from ongoing claims inflation and act accordingly.

In a letter to general insurance chief actuaries, it reported: “We expect claims inflation to affect all general insurance firms, although the nature of the impact will vary depending on the firm’s business model and risk profile.

“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.”

There is a risk that persistently elevated claims inflation might result in a