Inflation Impact on Insurance Companies and Retirement Plans
Background and Purpose
Inflation historically has always been a risk to insurance companies, retirement plans and a wide variety of actuarial risk management programs, but recent economic conditions and world events have quickly brought the risk more into focus. Annual rates of inflation had moved dramatically up over the past year with the COVID pandemic creating new wrinkles in supply chains and labor markets, and world conflicts causing further economic issues. These inflation trends can have a large impact on operating costs, create more unpredictable loss costs and reduce the purchasing power of payments made by retirement plans.
Research Objective and Deliverables
This research work would investigate the variety of potential impacts of increasing inflation from many angles, such as the impact on one or more of the following:
- products and services in actuarial practice areas
- risks in the pricing and product development of insurance products
- retirement security planning and products
- risks in insurance company operations
- risks to retirement security costs and financial risk management
- risks to retirement plans and social systems that may use cost of living adjustments in their benefit formulas
- levels of interest rates and investment returns that may be impacted by inflation
The research would be preferable in the form on a report for publishing on the SOA website that would highlight risks and impacts stemming from inflation.
Target Audience and Impact
A broad set of actuarial practice areas would use this report as a reference for considerations of inflation risks, and methods to consider for evaluating the risk.
Estimated Cost
$15,000 - $25,000