5 predictions for the insurance industry in 2025

The insurance industry faces major changes in 2025. Demographics, climate impacts and geopolitical change are shifting the landscape—literally and figuratively—and will push insurers to adapt. Faced with new opportunities and risks we expect the industry to challenge orthodoxies and spark reinvention. 

1. The aging population becomes the dominant industry force.

Longer life spans and lower fertility rates are projected to push the global median age to 32 in 2025—up from 30.9 in 2020. But what constitutes “retirement age” is shifting with other traditional milestones, such as marriage and homeownership. 

There is greater diversity in lifestyles and aspirations. As people age, insurers will find new opportunities to innovate and tailor health, life and hybrid retirement offerings that address the longevity risk and complex needs of older adults. 

This innovation will become a matter of urgency for Gen X with its oldest members turning 60 in 2025 and many unprepared for it compared to other generational cohorts. In the US for example, 48% of Gen Xers say they have done no retirement planning—7 points higher than Millennials. Retirement services becomes a strategic priority for the industry as carriers reinvent how to serve this economically powerful segment. 

More retirees than the world has ever seen is a challenge that goes well beyond this year and this industry. It creates interconnected risks as healthcare providers, governments and communities struggle to scale up services for the elderly in a competitive labor market. 

2. Property insurance creates an existential crisis.

Personal and Commercial property makes up approximately 30% of global P&C premiums and has fueled top line growth with strong rate growth in recent years. This rising tide has waned as increasing claims from catastrophic events linked to climate change push many insurers, reinsurers and even the public “insurers of last resort” to exit the segment. 

The devastating start to 2025 in southern California is the latest reminder of the impacts catastrophic events can have on people’s lives and communities. Growing awareness will continue to spur action.  

Regulatory changes like those in California and in Italy are a start, but systemic solutions that address pricing as well as resilience at the community level are necessary. In 2025, we expect to see more public-private partnerships aimed at increasing climate resilience in the communities most affected. 

3. Instability drives insurers to focus on what they can control—cost.

In an uncertain geopolitical world that will drive volatility into the macroeconomic environment (e.g. interest rates, supply chains, multinational commerce), insurers will turn to what they know and what they can control. Costs are knowable. To the extent they are controllable, that is where insurers will look to improve combined ratios. 

4. AI is the new talent segment that reshapes talent strategies.

AI is now in your business and being used by your workforce to drive efficiency and make more effective decisions. In 2025, insurers will focus on sourcing skills needed to scale AI across market facing and corporate functions. 

The historical apprenticeship-based career path has been disrupted by AI. Insurers will take new approaches to talent sourcing and development, including looking well beyond their own walls for expertise and capacity for the full spectrum of low to high domain expertise roles.   

5. Pricing of legacy tech ends “kick the can” for CIOs.

Carriers and CIOs hoping to get a few more years out of their legacy technology by delaying resource-intensive technology modernization will find they are kicking that can down a toll road.  The industry will see more of the dramatic price increases for legacy technology (a la VMWare). The risk and economics of modernization will fundamentally change in 2025, forcing the industry to take (much delayed) action. 

We remain optimistic. 

Four years ago, we published our Revenue Landscape 2025 report in which we predicted global insurance industry revenues would grow to $7.5 trillion by the end of 2025. Based on current forecasts the industry is on course to exceed that with a worldwide total premium volume of $7.7 trillion by the end of the year. Whether that premium growth translates to profitable growth will be our collective challenge.  

We believe the industry will embrace the challenges of 2025 to reinvent—and we look forward to being at the heart of that reinvention.