Collaboration between underwriting and claims management will expand, driven by the need to refine products to fit the new circumstances. (Credit: Creativa Images/Adobe Stock)
Now that 2025 is well underway, some of the top trends that are likely to affect both the commercial and personal insurance sectors for the rest of the year are starting to form a clearer shape.
As the risk landscape becomes increasingly volatile, the entire insurance ecosystem is likely to experience stress as it struggles to adapt. The good news for the industry is, there is opportunity in some of these challenges.
Trend No. 1: Pressure on climate-distressed markets
Areas with exposure to wildfires, severe convective storms, and wind/hurricanes have seen these climate changes accelerate. In the coming year, this will force carriers, consumers and regulators to rethink how they approach these risks. Insurers, particularly admitted insurers, will continue to pull back from these markets as reinsurance rates rise for these risks. Insurers will need a robust aggregation and concentration management system built into their underwriting processes to ensure that their appetite is known and not exceeded.
State regulators and funds will need to proactively work with markets to ensure coverage, including risk mitigation techniques for the most exposed areas. Meanwhile, consumers will increasingly look for consultative services to mitigate risks, representing a potential source of fee income for brokers and carriers who have prepared for this.
Given the recent catastrophic losses in California, carriers may begin to look even further afield to mitigate climate-related risks. There are already signs of new strain areas appearing in other Western states, e.g. Colorado and Washington for wildfire, and in the south and Texas for convective storm and wind risks. These new areas are in addition to markets already under strain, such as California, Florida and the Gulf.
Trend No. 2: Growth for non-admitted and specialty markets
Non-admitted and specialty markets, that is, independent insurance companies that are not licensed by state insurance department, will continue to exhibit strong growth and represent real opportunity for both large and niche carriers, independent managing general agents (MGAs), and brokers alike.
As more risks become increasingly difficult to place (including those related to climate risks), cybersecurity, trade risks, and other emerging technologies like GenAI, carriers and brokers that are prepared with ppecialty and non-admitted offerings will be poised to capitalize on the growth quickly and capture market share in this quickly growing and evolving market.
Trend No. 3: Accelerated use data, analytics and GenAI
Data and analytics use, including the use of GenAI applications, will continue to accelerate across the entire value chain, with early adopters that have focused use cases reaping the most benefit as these technologies continue to scale. Beyond the initial use cases that many carriers and brokers have explored for GenAI in ChatBots and software development, those that focus on augmentation of their core agents (primarily underwriters and brokers) will see the largest lift in both productivity and risk assessment and will set the stage for further enhancement as these technologies scale at lower costs.
Critical to GenAI’s success in insurance will be the integration of the technology into the core value chain, in a way that seeks to enhance and augment, not replace, the human touch — the core risk assessment expertise that P&C carriers and brokers sell to clients.
Carriers and third-party administrators will also further integrate these capabilities into their claims handling processes, allowing claims adjusters to more quickly handle claims. This will lead to better claims outcomes, with shorter turnaround times for clients.
Trend No. 4: Underwriting and claims management collaborate on product refinement
Given the major changes in the risk landscape and the insights generated by GenAI deployments across the value chain, collaboration between underwriting and claims management will grow even stronger, driven by the need to refine products to fit the new circumstances.
With advances in GenAI technologies and more claims and underwriting and form data being ingested, there is potential for a much tighter collaboration between underwriting and claims divisions to ensure that emerging risks and trends, as reflected in loss experiences, are automatically fed back into underwriting for potential appetite changes in the short term and larger filed form and rate changes in the long term.
Carriers that create a feedback loop and structured process for risk management and product development, in contrast to the manual interlocking that has typically been the case, will potentially see large gains in underwriting performance over both the short and long term.
Climate-related pressures will continue to reshape both personal and commercial insurance markets, pushing insurers, brokers, and regulators to innovate in risk management strategies. At the same time, the growth of non-admitted and specialty markets offers a promising avenue for expansion. The integration of data, analytics, and GenAI technologies will further enhance productivity, improve claims outcomes, and refine underwriting processes, fostering closer collaboration across the value chain.
The insurance industry in 2025 is poised to face a combination of challenges and opportunities, driven by the evolving risk landscape, technological advancements, and market shifts. As insurers adapt to these changing dynamics, those that embrace these trends and stay ahead of emerging risks will be better positioned for long-term success in an increasingly complex environment.
Brian Nordyke is a managing director in the Financial Services practice of SSA & Company, a global management consulting firm, where he leads insurance engagements. He can be reached at bnordyke@ssaandco.com.
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