Foreword

Finding Opportunities Within a Shifting Insurance Market

The global insurance sector is currently experiencing diverse and complex market pressures, with conditions varying significantly by region. We are observing a complicated market tightened by competitive dynamics and economic factors worldwide. Over two-thirds of global respondents to our survey reported that these challenges are driving higher claims costs, ultimately leading to increased premiums.

However, rising claims costs are only part of a larger puzzle. Additional drivers, such as the increased cost of reinsurance, social inflation, regulatory shifts, climate change, and the frequency of natural disasters, have also contributed to higher claims costs worldwide. While the driving factors are similar, regional nuances have shaped different outcomes across the globe. For instance, in the Australian insurance market, over half of survey respondents identified climate change-related risks as the most significant driver of premium increases.

Globally, certain business lines, such as motor insurance, are facing additional factors that are leading to increased premiums. Contributing factors include increased vehicle repair costs, increased replacement part expenses, and other financial pressures that continue to impact insurers’ loss ratios.

To navigate these pressures, insurers are implementing strategies to manage costs and maintain profitability. These include premium adjustments, stricter underwriting guidelines, enhanced claims management processes, alternative risk transfer solutions, and strategic investments in technology. Many Australian insurers are also closely monitoring credit rating agencies for potential downgrades or negative outlooks, which could influence market strategies and competitive positioning. With global credit reporting agencies anticipating that these challenges will persist in the reinsurance market, insurers may benefit from paying close attention to the effects on the entire supply chain.

While most survey participants foresee a moderate to significant hardening of the market, there continue to be opportunities for insurers looking to differentiate themselves. Looking ahead, advancements in data analytics, cyber security, and artificial intelligence will enable insurers to mark themselves out in a competitive market. However, capitalising on these would require significant investment. To optimise the return on investment, insurers may want to look for guidance from a trusted advisor with a deep understanding of the evolving nature of global challenges and technological innovations.

Here is where partnering with Gallagher Bassett (GB) can help insurers navigate these shifts and unlock value. At GB, the methodology underlying our Carrier Practice model stands apart from traditional approaches. We work in close partnership with insurers, offering a cross-functional team focused entirely on achieving specific targets and goals, supporting managing general agents, program administrators, captives, and alternative risk managers.

Additionally, our expanding utilisation of AI and machine learning enables us – and our partners – to harness the latest advancements in generative AI and other transformative technologies. As the industry evolves, GB is well-positioned to help insurers navigate emerging challenges and seize new opportunities with agility and confidence.

Our experienced professionals take a proactive approach to managing risks, focusing on resiliency and efficiency, ensuring insurers stay ahead of the competition now and in the years ahead.