As we approach the new year, Risk Strategies takes a deeper look at the trends, insights and opportunities available to insurers and their customers.
The market is constantly changing. As the fourth quarter of 2024 draws to a close, it’s time for insurance professionals to start thinking about what the next year has in store, both in terms of challenges and opportunities.
This proactive approach can lead to success in any business.
“Proactive risk management and strategic planning are at the core of driving business resilience,” said John Scrope, National Director, Retail Operations, Risk Strategy. “What practice and product line experts have to say about market challenges, specific product lines and future stability helps clients stay ahead of risk.”
Risk Strategies has released a State of the Insurance Market report that summarizes some of the key trends for 2024 and provides an outlook for 2025.
Below is a summary of the report, highlighting key insights into individual sectors and key considerations for insurance professionals going forward.
Main findings
John Scroope, National Director of Retail Operations, Risk Strategy
Perhaps most notable, this report reviewed the market challenges faced by each industry. With historic loss levels continuing into 2024, it’s no surprise that catastrophic asset losses and auto lines pose major challenges to the market.
“This situation is impacting the availability and affordability of insurance for our customers,” Scrope said.
Catastrophes are also associated with inflation and rising costs such as interest rates and supply chain issues, further impacting overall insurance costs.
But there are some positive signs for 2025.
“Despite the challenges, some insurance products such as business liability, cyber coverage and workers’ compensation are stable,” Skrope said. “These areas have adequate capacity and consistent rates, especially for organizations that have effective risk management strategies in place and have a favorable risk profile.”
Many factors influence risk. Medical bills and insurance claims are one of them.
The Risk Strategy report points to an upward trend in insurance claims costs due to economic factors and social inflation, and further increases due to rising litigation costs and nuclear judgments.
“Employers are also facing rising healthcare costs, which will impact employee benefit programs and require a more tailored approach,” Skrope said.
Industry highlights
This report provides an in-depth look at market conditions, coverage considerations, and pricing forecasts for various industries. From agriculture to transportation, art to healthcare, this report provides insurance professionals with current trends and some things to prepare for in 2025.
In the agricultural sector, profit margins have continued to shrink for the second consecutive year, reducing the returns on agricultural production. Looking ahead to 2025, it is clear that insurance agents must be qualified and capable to properly evaluate all insurance and farm rate options.
Although current prices are stable, the airline industry has undergone dramatic changes in recent years. This resulted in more capacity being covered over a wider area and increased limits. This is all good news for the sector.
According to the report, “While interest rates remain stable, the aviation underwriting market is becoming increasingly competitive, and as competition increases, capacity and lucrative opportunities for new entrants in the aerospace industry increase. “We are doing so.”
Regarding higher education, the report predicts that the major business and insurance issues of 2024 will continue to impact educational institutions through 2025.
Financial stability, demographic changes, leadership and talent crises, and technology impact higher education insurance. Not to mention student health insurance, which has seen premiums increase by about 5% over the past three years.
As universities grapple with managing health plan costs, student health remains a top priority. Many schools struggle to include adequate coverage in their liability programs for both abuse and traumatic brain injury.
Captives, consortia, and other alternative risk financing options continue to grow in popularity as universities seek more control over risk financing.
In general medicine, M&A continues to be at an all-time high, with 31 hospital mergers announced in the first half of 2024. The sector also faces high levels of personnel burnout and shortages, and facilities are tightening profits to support and sustain health care costs. labor force.
“Real estate space (including office, industrial, retail, residential, hospitality, etc.) continues to be influenced by a wide range of variables that can impact capacity availability, breadth of coverage, competitive rates, etc. ” report.
The transportation industry faces both growth and challenges due to increased demand for last-mile deliveries and labor shortages. The report says it remains a tough market.
Certain risk factors continue to drive recent premium increases, including +20% to 25% for property damage, +10% to 30% for comprehensive liability, and 10% to 20% for auto liability. .
Highlights by insurance product
John Greenbaum, National Employee Benefits Practice Leader, Risk Strategy
In addition to industry, Risk Strategy has reviewed insights by insurance sector.
The captive insurance market is found to continue to grow in 2024 thanks to continued economic pressures and flexible risk management solutions. “Captives are seen as a versatile tool for risk retention and transfer, and their scope of application has expanded beyond traditional areas to include property coverage, excess coverage, etc.” Liability and innovation revenue-generating programs,” the report states.
While most property and casualty insurance premiums and rates continue to rise due to uncertain liability loss trends, competition for new business may tip the scales in some industries.
Cyber is still rapidly evolving. Amid a resurgence of ransomware attacks in late 2024, carriers appear to be maintaining stricter cyber underwriting.
Organizations typically see their cyber premiums declining by 5% to 10%. However, organizations that implement multi-layered cybersecurity controls can see their premiums reduced by up to 20%, and sometimes more.
AI continues to attract the attention of insurance companies as a double-edged risk. On the other hand, AI tools can help improve incident detection through cyber risk management. But on the other hand, cybercriminals are using AI to cause harm.
Continuous change is the norm in the world of employee benefits, and as 2024 comes to a close and 2025 begins, the Risk Strategy Report predicts several drivers of change. Increased focus on equity and employee experience, pharmacy innovations are impacting cost trends, and costs are expected to increase. Such as transparency scrutiny that emphasizes the fiduciary responsibility of employers.
“In our initial outlook for 2024, we saw workforce changes and employment dynamics increasing the impact of turnover and the fast pace of pharmacy innovation trends. , we expected changes in acceptance and claims patterns to play a significant role in increasing costs for employers,” said John Greenbaum, National Employee Benefits Practice Leader, Risk Strategy.
Perhaps one of the biggest saving graces for 2024 is that the non-life insurance market has stabilized significantly over the past year, primarily due to two years of improving insurer and reinsurer profitability and reinsurance market conditions. .
Catastrophic weather, especially wildfires, remains a major problem for space, increasing reliance on the surplus line market. According to the report, parametric solutions serve as another alternative to traditional property and casualty insurance, offering “quick financial relief based on pre-defined triggers.”
For private customer services, the main factors driving market challenges are severe weather activity, a complex regulatory environment, and fluctuations in reinsurance rates and terms. Throughout 2024, we saw challenging market effects in real estate, auto, and rising excess debt ratios. However, for private customers, risk strategies remain optimistic about the future.
“The reinsurance market is stabilizing as insurers have made fundamental changes to their portfolios, including changes in interest rates, coverage and overall risk selection, particularly in catastrophe-prone regions.” said Alison Murphy, National Private Client Services Practice Leader, Risk Strategy. “We are finding better and more creative solutions for challenging properties, including coastal and wildfire exposure risks, in unpermitted markets.Additionally, with challenging market conditions, our clients It gives us the opportunity to interact more frequently with the public and rethink our approach to conservation.”
Work with experts who understand it
Alison Murphy, National Private Client Services Practice Leader, Risk Strategy
Building business resilience starts with understanding the risks that impact your organization and is enhanced by a top-level risk management strategy.
The Risk Strategy Insurance Market Status report is aimed at providing risk professionals with the first steps to protect their businesses and create resilience as they navigate the challenges and opportunities faced in the market.
“Risks are not going away; they continue to evolve and become more complex,” Scrupe said. “We have compiled industry insights from our professional practice and product line insurance experts who work with customers every day to stay ahead of risk.”
Every company wants a partner who understands their unique needs. Risk Strategies aims to be the relevant broker in the market with deep experience in our core insurance product lines and highly trained expertise to support our clients in those areas.
“Understanding trends and conditions in your business sector is key to developing risk management strategies that ensure long-term resilience, profitability and success,” Scrope added. “We want to protect what matters most to our customers while building security and stability for 2025 and beyond.”
For more information, please visit https://www.risk-strategies.com/state-of-the-insurance-market-report-2025-initial-outlook-2024-wrap-up.
This article was produced by R&I Brand Studio, a division of Risk & Insurance’s advertising department, in collaboration with Risk Strategies. Risk & Insurance’s editorial staff was not involved in the preparation of this article.
At Risk Strategies, we specialize in providing specialized insurance solutions, risk management advice, and consulting services designed to meet the unique needs of businesses and individuals. Our team of experienced professionals provides comprehensive solutions, from commercial insurance and employee benefits to private customer service and specialized risk management.
