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Conning Research | Insurance companies must be flexible by 2025
The New administration that has taken office in Washington continues to bring uncertainty to the macro-economic environment. This is why it’s the time when insurance companies must be strategically flexible.
This was the message from Conning when the research firm presented its outlook for the year ahead during a recent webinar.
Insurers need to be flexible enough to take advantage of new opportunities, as certain trends will influence the insurance landscape in 2025. Scott Hawkins, head of research on insurance for Conning, has identified four forces that will influence the industry of insurance in 2018, including economic growth, insurance regulation, the rise of artificial intelligence, and changes in the reinsurance industry.
Trump’s proposed tariffs on imports could affect the insurance industry, Hawkins added. The increased costs of imports due to tariffs could trigger inflation, which will affect life insurance and annuity insurers by increasing the yield on investment and costs for claims. Property and casualty insurance companies face increasing claims costs due to tariffs on construction and repair supplies, as well as shifting to another country, raising the amount of workers’ compensation claims.
Employment rates that are expected to rise by 2025 are a good thing for insurance companies, Hawkins said. A higher level of employment means that more people can afford insurance, and companies can hire more people to offer benefits to.
Insurers are looking to improve efficiency in the coming year, according to Alan Dobbins, Conning’s director of research in insurance. Carriers are expanding automation, streamlining processes, and continually seeking ways to cut costs – by utilizing more artificial intelligence or by reducing personnel.
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Life insurance companies show strong performance and profitability
The life and annuity market will be affected by the growth in market demand as well as portfolio yields and new products by 2025. Hawkins said.
Life insurance companies show a solid profit in addition to capital growth. Hawkins declared that the positive expansion is likely to last throughout the entire year, assuming that the spread of another pandemic is not accelerated.
Annuities also show a high increase in premiums going into 2025, he added. “Premium growth will remain a hot topic of conversation this year and next,” said the analyst.
The life insurance business has potential for growth because all four generations of Americans, such as baby boomers Generation X as well as millennials and Generation Z, will be looking to purchase insurance. “Life insurers will be marketing to four distinct generations with distinct needs,” said the experStatedted.
Conning is also predicting that the life insurance industry will grow its market share and sales of policies by 2025. But, the high mortality rate in men between the ages of 25 and 50 will affect the life insurance market.
“But the flip side of excess mortality is increased longevity,” Hawkins stated. “This is fueling interest for guaranteed income products.”The
P/C industry is booming despite losses to high cats
The main trends that will impact the P/C industry by 2025, Dobbins noted, will be the homeowner’s insurance issue, a better understanding of the market for auto insurance negative litigation trends, growing the risk of cyber-attacks stabilizing reinsurance, including data, and expanding the potential for surplus lines and excess lines.
“These are challenging trends in 2025,” he stated. “When you layer them with uncertainty over the new administration’s agenda, insurers must prepare for flexibility.”
Conning expects high P/C growth for 2025, as the U.S. economic outlook picked up following the elections of 2024. The growth in premiums is expected to be the highest for commercial properties, commercial autos as well as homeowners’ insurance.
However, the P/C business was afflicted with above-average losses due to catastrophes in seven of the last eight years. The year 2025 was off to an unfavorable start due to the massive wildfires that devastated Los Angeles. Los Angeles area.
The ever-changing litigation environment is a major challenge for P/C insurance companies in the year 2025. Dobbins said. “Nuclear” verdicts, third-party litigation funding, increased liability, and the use of social media to increase risk are all elements in the litigation landscape.
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