The crystal ball is murky – InsuranceNewsNet

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As you can imagine, Insurance News Net magazine is written a few months in advance. As I write this letter from the editor, we are at the end of July. What’s interesting is that it’s been a long time since there have been big questions about what the economic landscape will look like in the months ahead. Until recently, the country was on a steady economic trajectory and most economic news was bullish.

With gas prices stabilizing a bit but still very high, the war raging in Ukraine, and inflation showing little sign of abating, what things might look like in September is indeed a mystery.

The factors that generate additional concern also seem to be gaining momentum. For example, in the first half of 2022, the United States experienced three convective storms, each causing over $1 billion in damage. And the worst storm damage usually occurs during hurricane season in the second half, especially the third quarter. According to Aon’s Global Catastrophe Recap report for the first half of the year: “From a risk perspective, the fingerprints of climate change have continued to become more evident in the behavior of individual events and long-term trends. temperatures and precipitation as of 1H 2022. Warmer than average temperatures were cited over a wide swath of the globe.

In the United States, we have seen prolonged record high temperatures in some areas, bringing everything from drought to wildfires. As damages in the natural catastrophe sector accumulate, we have also seen higher costs in other sectors of the insurance market. Automotive costs – for new and used cars – have risen dramatically as vital chips have become scarce. Additionally, inflation has inflated the cost of auto parts – and therefore repair costs – and supply chain issues have compounded the overall impact.

Inflation has risen from a four-decade high of over 8% last month to a new high of over 9%. That, combined with the Federal Reserve’s sharp rate hikes to stem the tide of inflation and a litany of recent market reactions, has likely put us on the path to recession.

Over the past decade, as we weathered the recession of 2008, we have grown accustomed to predictable market strength and low inflation. Looking back at just two months or so and not having a good idea of ​​what the economy might look like at that time can shake your sense of calm.

I have heard different views on this unpredictability. Life insurance has taken a more strategic position in the area of ​​retirement planning since the market has become more unpredictable. Many advisors said that the traditional 60/40 investment strategy should not be relied upon. Rising interest rates have sparked new interest in annuities. And the market for indexed products continues to grow at lightning speed with many new indices – some of them so new that they have very little history to back up current performance.

Despite the unpredictability, many who have weathered such economic storms before say there are opportunities during this time of financial turmoil. One person said you should ignore everyday noise, which will free you up to do what you do best. Most of our conversations about financial investments and insurance revolve around risk and the future. We know there will be bear markets and challenges, and the goal is to put in place a financial strategy to ensure security and a viable future despite these challenges. Many of the insurance products and investment strategies we put in place serve this purpose.

This is when the lessons of the past matter most – and putting a plan in place for the unpredictable future is what customers rely on the financial services industry for most.

Please let us know your thoughts: [email protected].

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