Inflation Risk for P&C Insurers
Last updated 12th April 2010 - 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.
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.