Inflation Risk for P&C Insurers
Document ID: 2010-1799
Published on: 19th April 2010
Author: Harry Hibbert
Any firm with assets or liabilities linked to prices within a particular region or sector will be able to improve its understanding of the risks it faces by explicitly modelling the inflation rates of those prices. Aggregated price indices such as the CPI can only ever proxy the distinct inflation risk profile faced by individual companies. This note focuses on the potential divergence of country specific inflation rates in the Eurozone and Medical cost inflation in the U.S from their aggregated counterparts.
