Impact of inflation on insurance industry?

Answer 1

Inflation is rise in price of commodities in the economy. Inflation takes away the spending capacity from a consumer in an economy. As such premium must be paid during the initial period. However when people are facing a hard time fulfilling their basic needs such as rations how can we expect people to pay premium? Premium is paid to insure themselves from risk. But context here is different. People will be facing tough situation and encountering sky-rocketting price meaning spending power of consumer will decrease. So there will be decrease in number of insured around the world if the inflation hit hard.