laims inflation refers to the trend of rising claim costs over time, driven by factors such as general economic inflation, wage and medical cost increases, supply‑chain disruption, repair‑cost escalation, and legal or social inflation. It can materially erode pricing adequacy and reserve sufficiency if not captured promptly in rating and actuarial assumptions. Insurers monitor claims inflation through triangulations, market intelligence, and vendor data, adjusting underwriting strategy, policy terms, and reinsurance to preserve margins and capital strength.
