The insurance industry will face significant changes in 2025. Demographics, climate impacts and geopolitical changes are radically changing the landscape and will push insurers to adapt. In the face of new opportunities and risks, we expect the industry to challenge orthodoxies and inspire reinvention.
1. The aging of the population has become the leading force in the industry.
Longer lifespans and lower fertility rates are expected to drive global median age By 2025, this number will increase from 30.9 years in 2020 to 32 years old. But the definition of “retirement age” is changing along with other traditional milestones, such as getting married and owning a home.
Lifestyles and aspirations are more diverse. As people age, insurers will find new opportunities to innovate and tailor health, life and hybrid retirement products to meet the longevity risks and complex needs of older adults.
This innovation will be a priority for Generation In the United States, for example, 48% of Gen Xers say they have done no retirement plan— 7 percentage points higher than Millennials. Retirement services have become a strategic focus for the industry as operators redesign how to serve this financially strong segment.
There are more retirees than at any time in the world, and this is a challenge that extends far beyond this year and this industry. Interrelated risks arise as health care providers, governments, and communities work to expand services for older adults in a competitive labor market.
2. Property insurance creates an existential crisis.
Personal and commercial property accounts for approximately 30% of global property insurance premiums and has driven revenue growth in recent years with strong rate growth. This upward trend has waned as claims from catastrophic events related to climate change have continued to rise, forcing many insurers, reinsurers and even public “insurers of last resort” out of the field.
Southern California’s disastrous start to 2025 is yet another reminder of the impact catastrophic events can have on people’s lives and communities. Growing awareness will continue to spur action.
Regulatory changes, e.g. california and in Italy is a start, but systemic solutions to address pricing and community-level resilience are necessary. By 2025, we expect to see more public-private partnerships aimed at increasing the climate resilience of the most affected communities.
3. Uncertainty prompts insurers to focus on what they can control – costs.
In an uncertain geopolitical world where macroeconomic conditions (e.g. interest rates, supply chains, cross-border commerce) will fluctuate, insurers will fall back on what they know and can control. The cost is known. Within controllable limits, insurers will seek to improve combined ratios.
4. Artificial intelligence is a new talent field that reshapes talent strategies.
Artificial intelligence is now integrated into your business and used by your employees to increase efficiency and make more effective decisions. By 2025, insurers will focus on the skills needed to scale AI across market-facing and enterprise functional areas.
Historical apprenticeship-based career paths are already being disrupted by artificial intelligence. Insurers will take a new approach to talent sourcing and development, including looking beyond their own boundaries to look for a full range of expertise and capabilities in positions ranging from low to high domain expertise.
5. Pricing of legacy technologies ends CIOs’ “kicking the can.”
Operators and CIOs looking to leverage a few more years of legacy technology by deferring resource-intensive technology modernization may find themselves heading down a toll road. The industry will see significant price increases for more traditional technologies (Similar to VMWare). Modernization risks and economic conditions will fundamentally change in 2025, forcing the industry to take (much delayed) action.
We remain optimistic.
Four years ago we published Revenue pattern in 2025 Report among them We predict that global insurance industry revenue will grow to US$7.5 trillion by the end of 2025. based on current forecast Total global premiums for the industry are expected to exceed of It will reach $7.7 trillion by the end of the year. Whether premium growth translates into profit growth will be a challenge we all face.
We believe the industry will rise to the challenges of 2025 and be reinvented – and we look forward to being at the heart of this reinvention.
