We anticipate key trends we’ve seen in the P&C insurance industry over the past 12 to 18 months will continue. In personal lines, auto theft will continue to affect customers and carriers because of increasingly sophisticated criminal tactics and high claims frequency.
We expect increasing property risk complexity due to heightened frequency and severity of natural disasters. In 2023, severe weather events cost the insurance industry over $3.1 billion in losses; in 2024 total losses are nearing an estimated $8 billion.
Catastrophic weather events continue to impact both personal and commercial lines, underscored by economic challenges such as high inflation. Additional risks businesses must navigate, including cyber threats and supply chain constraints, will increase demand for innovation when navigating coverage options. This mix of persistent and emerging trends will pressure strategic business continuity planning in the year ahead.
In the commercial space, we have seen traditional carriers testing the waters in the specialty market. We expect this to continue in 2025 and anticipate increased competition, coupled with aggressive pricing strategies to attract customers. As market cycles and loss experiences develop, these carriers could shift strategies, leaving customers vulnerable to being under- or uninsured.
Despite growing competition in select segments of the specialty commercial market, certain classes remain underserved due to their perceived risk, lower volume or lack of expertise. Specialty programs and partnerships with MGAs will play an integral role in filling the gap in coverage for these niche classes of business, including taxi and residential realty.
In response, specialty carriers must maintain focus on disciplined underwriting. This will underscore the importance of, and drive an increased need for, sophisticated and data-driven risk modelling, individualized underwriting and proactive loss prevention. Carriers will need to refine and enhance their risk modelling, and brokers will need to focus on loss prevention advice to balance risk and bring coverage solutions to their commercial customers.
Training and tools created in partnership between brokers and an insurer’s in-house loss prevention team will empower businesses to prevent or minimize losses in the event of a natural disaster. And brokers will help ensure customers’ resilience when navigating an evolving market landscape.
