The insurance industry is facing major changes in 2025. Demographic shifts, climate impacts and geopolitical shifts are changing the landscape – literally and figuratively – and will force insurers to adapt. Given new opportunities and threats, we expect the industry to challenge traditional thinking and inspire reinvention.
1. The aging population is becoming the dominant force in industry.
Longer life expectancies and lower birth rates are likely to drive development global average age to 32 in 2025 – from 30.9 in 2020. But what constitutes “retirement age” is shifting with other traditional milestones like marriage and homeownership.
There is a greater diversity of lifestyles and desires. As we age, insurers will find new opportunities for innovative and tailored health, life and hybrid retirement offerings that address the longevity risk and complex needs of older people.
This innovation will be for the generation. In the US, for example, 48% of Generation X say they have done this no retirement provision– 7 points higher than Millennials. Retirement services are becoming a strategic priority for the industry as carriers reinvent the way they serve this economically powerful segment.
More retirees than the world has ever seen is a challenge that goes far beyond this year and this industry. Interrelated risks arise as healthcare providers, governments and communities struggle to expand services for older people in a competitive labor market.
2. Property insurance leads to an existential crisis.
Residential and commercial real estate accounts for approximately 30% of global property and casualty premiums and has driven revenue growth with strong rate increases in recent years. This rising tide has subsided as increasing losses from catastrophic events related to climate change force many insurers, reinsurers and even the public “insurers of last resort” to exit the segment.
The devastating start of 2025 in Southern California is the latest reminder of the impact that catastrophic events can have on people’s lives and communities. Growing awareness will continue to inspire action.
Regulatory changes like those in California and in Italy are a start, but systemic solutions that address pricing and resilience at the community level are necessary. In 2025, we expect more public-private partnerships aimed at increasing climate resilience in the most affected communities.
3. Instability causes insurers to focus on what they can control: costs.
In an uncertain geopolitical world that will lead to volatility in the macroeconomic environment (e.g. interest rates, supply chains, multinational trade), insurers will rely on what they know and what they can control. Costs are visible. To the extent that they can be controlled, insurers will try to improve the combined ratios.
4. AI is the new talent segment that is reshaping talent strategies.
AI has now arrived in your company and is being used by your employees to increase efficiency and make more effective decisions. In 2025, insurers will focus on sourcing the skills needed to scale AI across all market and business functions.
The historic apprentice-based career path has been disrupted by AI. Insurers will take new approaches to finding and developing talent, looking well beyond their own borders for expertise and capacity across the full range of low- to high-skill roles.
5. Legacy technology pricing is a “kick-to-the-box” for CIOs.
Network operators and CIOs hoping to squeeze a few more years out of their legacy technology by delaying resource-intensive technology modernization will find themselves walking down a toll road. The industry will see further dramatic price increases for legacy technology (a la VMWare). The risk and economics of modernization will fundamentally change in 2025, forcing the industry to take (much delayed) action.
We remain optimistic.
Four years ago we published ours Sales landscape 2025 report in which We predicted that global insurance industry revenue would rise to $7.5 trillion by the end of 2025. Based on current forecasts With a global total premium volume, the industry is well on its way to exceeding this figure from $7.7 trillion by the end of the year. Whether this premium growth leads to profitable growth will be our shared challenge.
We believe the industry will rise to the challenges of 2025 and reinvent itself – and we look forward to being at the center of that reinvention.
