As 2024 draws to a close, it’s a good time to reflect on what the insurance industry has achieved, what surprised us and how longer-term trends have evolved.
From an industry results perspective, 2024 was a strong year. Airlines benefited from interest rate hikes and sustained (but falling) interest rates Global insurance premiums grow by 4.6% in 2024, exceeding the average of the last five years of 1.6%. Growth was driven by life insurance, with a decade high of 5% in 2024. While non-life growth was 4.3% as against 3.1% CAGR in the last five years due to the impact of the hard market. Life and non-life premiums accounted for 43% and 57% of total premiums, respectively, in 2024. Steady economic growth and robust labor markets continued to support the industry.
As a qualitative basis for these financial and operating results, we have determined the following:
- AI has had a significant economic impact.
According to C-suite customers surveyed by Accenture worldwide, 87% of operators (91% P&C; 82% L&A) achieved significant financial benefits from the use of genetic AI. The industry has monetized robust production solutions for improved underwriting and claims processing for segments of the insurance portfolio. But in a world of ever-increasing expectations, the demand is now for impact “at scale” (i.e. moving from impactful individual use cases to impact across functional or value chain areas).
- Insurers met the increasing demands on core functions with alternative talent strategies.
The underwriting function, which has long struggled with an aging workforce and outdated processes, received some relief in 2024 with AI and Gen-AI, allowing senior underwriters to leverage their expertise in higher-value areas such as business development and negotiations. A prime example is QBE, which scales industry-leading AI-powered underwriting solutions that are replicated across multiple business lines. With AI, QBE can now process (i.e. derive and extract insights from) 100% of the submissions it receives from brokers and achieve higher quote-to-bind rates, with underwriters focusing on the highest value submissions.
Insurers also implemented strategies to meet increasing regulatory and capital requirements without increasing headcount by drawing on talent pools outside their organization and in lower-cost locations. For example, many insurers and reinsurers sourced high-quality actuarial, loss/CAT modeling and capital allocation resources from India, where they exist growing pool of actuarial talent.
- Optimizing operating models and segment growth was a recurring theme.
In recent years’ cost-cutting efforts, many department and business unit leaders have sought greater autonomy and cost control. In 2024, we saw insurers across all lines of business and regions thinning out their corporate headquarters and placing an emphasis on streamlining or streamlining strategic realignment their operating models and a greater focus on leadership Customer and product segments.
- Changes in the risk landscape led to cross-sector growth strategies and capital reallocations.
As insurers recognize the growth potential in the healthcare sector, they are building healthcare businesses and exploring opportunities around emerging healthcare risks. For example, Aviva supports Insurance Ireland Health level, An insurance company that offers its customers lower costs on a variety of plans. In the meantime, the FWD Group is dealing Emerging health risks among gamers in the Philippines and provides insurance solutions for gambling-related risks such as vision problems, insomnia and migraines. Care navigation, remote psychiatry and telehealth services also increased, with the total digital health market growing to $172 billion, up 16%.
Retirement was the focus in 2024. Concerns about longevity risk and retirement readiness brought attention and the need for change. As investors took advantage of higher interest rates and questioned whether defined contribution and public programs could provide adequate retirement income, pension plans set sales records for the fourth straight year. In China, workers covered by the public basic pension insurance system were allowed to do so voluntarily open a private pension accountthereby alleviating some of the systemic stress of a rapidly aging population. And more and more millennials who would benefit from the Great Wealth Transfer and are not interested in traditional career paths tended to do so Financial Independence, Early Retirement (FIRE) Movement.
- Prevention mindsets provide service revenue and reduced losses.
Today, risk reduction is the focus, and more insurers and their customers are turning to injury and illness prevention. 90% of new vehicles are offered in the USA standard automatic braking. And in 2024, the global market for advanced driver assistance systems grew by 17% (Statista). Finally genetic Cancer screenings and MRI scans like those offered to John Hancock customers through them at a discounted rate Partnership with Prenuvoenable early detection and better reduction of health, disability and mortality risks.
Outlook for 2025
As the holidays approach, there is reason for optimism. The insurance industry continues to operate from a position of strength.
