Introduction

Charting New Horizons — Trends Shaping Insurers and Insurance Markets

Key Findings

Premium affordability and insurability are the most cited business challenges by 49% of UK insurers.
Nearly two-thirds of global and UK insurers anticipate the market will harden within the next 12 months.
According to 77% of global and 73% of UK insurers, the accuracy of claim processing is the key quality metric to evaluate performance in claims management.
98% of insurers in the UK see reduced operational costs as the greatest value-add of generative AI adoption.

Economic volatility, climate change, technological advancements, and evolving customer expectations are transforming the insurance industry. Current market conditions have insurers facing a wide range of challenges, from managing the financial impact of rising claims costs to navigating new regulatory requirements. These pressures are reshaping the operational landscape, influencing everything from strategic decision-making to resource allocation.

In this dynamic environment, staying informed is essential for insurers striving to remain competitive. To this end, we conducted a comprehensive survey to gather valuable insights from 200 respondents across the UK, North America, Australia, and New Zealand. In addition to typical insurers, our survey participants included MGAs (14%), and underwriting agencies (12%). This diverse representation offers a well-rounded view of the current landscape and provides insights into the challenges and opportunities shaping the global insurance industry.

Key market challenges

Globally, three core challenges stood out in our survey responses: data and cybersecurity risks, premium affordability and insurability, and increasing market competition. In the UK specifically, the primary business challenges were premium affordability and insurability, adapting to rapid technological advancement, and regulatory compliance and changes. These issues highlight a business environment where financial pressures, digital vulnerabilities, and competitive dynamics are shaping industry priorities.

Furthermore, with the growing number of cyber incidents and their resulting impact on both operations and client trust, it is understandable why 44% of global and 33% of UK respondents regard data and cyber security as a significant risk.

Emphasis on increasing premiums

Increasing premium rates is the primary approach respondents have adopted globally (57%) and in the UK (64%) to manage evolving market dynamics. The second-ranked choice in the UK was using technology and data analytics to navigate the challenges of the hard market. Additionally, 47% of global and 56% of UK insurers are focusing on strengthening their claims management processes to better handle the complexities of the market. Market conditions have led insurers to be more selective over their underwriting decisions, scrutinising applicants’ risk profiles more rigorously and often setting stricter terms and higher premiums.

Globally, nearly two-thirds of survey participants identify rising claims costs as the primary driver of premium increases. In the UK, however, the leading factor is the increased cost of reinsurance, as voiced by 82% of the respondents. This sentiment may be due to the high reliance on the global reinsurance market, as well as factors such as inflation and climate change. It also highlights the critical need for effective claims management, advanced technologies to reduce claims leakage, and proactive strategic planning to navigate the complexities of an evolving market.