Insurers must outpace claims inflation by identifying emerging ’unknowns’ – Peter Graham

Insurers are placing an over-abundance of focus on written loss ratios based on today’s limited data, with not enough energy spent predicting future risk drivers, warned Peter Graham, non-executive chairman at Markerstudy.

Speaking during a Fireside Chat session hosted by MGAA chief executive Mike Keating at this year’s MGAA conference (3 July 2025), Graham explained that the industry must find alternative approaches to identify increasingly ”unknown” risks affecting supply chains and indemnity costs, which are making claims inflation harder to understand. 

He said: “We as an industry are really good at looking at [what] happened in the past [and] understanding that. Therefore, we can be fairly confident about what is going to happen in the future from a risk perspective, but it’s when those unknowns happen that we fall into traps.

“If we’re not stepping back and thinking about a broader perspective in terms of claims inflation I think we’re missing a trick because the game has changed. Because of the global economy, [this] can affect how much it ultimately costs us to settle claims.”

Graham added that industry is currently pricing business based on written loss ratios using today’s assumptions about claims inflation and settlement costs.

By investing more time in exploring emerging risks and potential “unknown unknowns”, he explained that insurers could ”unearth some gems that we kind of never knew existed”.

A collaborative approach

Addressing the impact of claims inflation on the consumer, Graham also believes that, to improve the industry’s reputation, it needs to adapt from a risk adverse approach with regulators to change the public perception that firms are “trying to pull the wool over [the] eyes of consumers”.

“There’s a danger that we see the relationship with the regulator as adversarial and I think that’s the wrong footing on which to have that relationship,” said Graham.

“We’re all wanting to drive good consumer outcomes and in the main they are achieved but I think we need to educate everybody and not just the regulator but government as well in terms of what’s really going on with running an insurance business [and that] it’s tough.”

From a personal lines perspective, Graham explained that an acknowledgement of past industry failings – for example, cases of price walking and its negative consequence on consumer faith – and for the industry to be more open about the challenges firms face would build a reputation.

He concluded: “As an industry we’ve got to come together more and collaboratively work for the greater good. The Motor Insurance Taskforce hasn’t really got going as we’d expect and that is for many reasons within what’s going on elsewhere in the government.

“Some people saw it as a threat, but I saw it as an opportunity to lift the covers more on what is really going on and secure more help from the government to combat fraud and the societal issues that we are having to deal with that really could do with being addressed.”