Some Considerations With Regard To Inflation

The following paper presents and uses a simplified framework to explore the impact of inflation across various aspects of loss reserving, pricing, and capital management. The primary intent is to highlight some general principles which can be used to understand where, how, and by how much inflation risk may affect various aspects of actuarial modeling; but its intent is also to encourage actuaries of the importance in adequately reflecting future expectations of inflation in their models.

Keywords. Inflation; insurance; reinsurance; collective risk model; reserving; ratemaking; capital modeling