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Guenter Kryszon, Chief Underwriting Officer at Markel Specialty, highlights the top 10 insurance trends of 2025 that will help shape the insurance industry's future.
Published on January 14, 2025
As we head into 2025, the insurance industry is set to undergo significant transformations driven by digital innovation, regulatory changes, and evolving customer expectations. Guenter Kryszon, Chief Underwriting Officer at Markel Specialty, shares his insights on the top 10 trends that will shape the industry, helping businesses stay ahead of the curve and seize new opportunities in a rapidly changing landscape.
#1 Natural disasters
Rising natural disasters continue to threaten insurance affordability and accessibility in 2025.
Reports show that natural disasters now result in insured losses exceeding $100 billion per year. Verisk reports that the average annual cost from global natural catastrophes has reached a new high of $151 billion, and that average exposure growth is expected to reach 7.2%. This trend has driven up premiums and has led insurers to pull out of high-risk locations like California and Florida, forcing many property owners to rely on state-backed insurance options or in some instances self-insure in regions prone to natural disasters.
Sources:
Verisk new report: Average annual natural catastrophe losses for the insurance industry reaches new high of $151 billion
Congressional Research Service: Natural disasters and the homeowners insurance market
Bipartisan Policy Center: Rising insurance costs and the impact on housing affordability
#2 Non-economic inflation
There is a growing need for legislative action to ensure the future availability of liability insurance. This may take the shape of legal reforms that address systemic issues contributing to social inflation, such as caps on punitive damages or streamlined litigation processes.
Social inflation has been driving up liability claims, with a 57% increase over the last decade, particularly due to rising court verdicts and legal expenses. A study by the Institute for Legal Reform shows that between January 2013 and December 2022, the median nuclear verdict during the 10-year period reached $21 million, and the average was even higher–$89 million.
Also, the estimated 7% annual increase in social inflation rates as of 2023 significantly surpasses the general economic inflation rate. These increases, linked to expanding litigation funding and larger jury awards, put significant pressure on insurers and policyholders, leading to higher premiums and reducing coverage availability in certain sectors, like trucking and healthcare.
Sources:
Insurance Journal - Navigating Social Inflation in a World of Complex Claims
Insurance Journal - US Nuclear Verdicts Break Records and Drive Social Inflation to 7% in 2023: Report
The U.S. Chamber of Commerce Institute for Legal Reform - What are nuclear verdicts?
57% increase in liability claims over the last decade
#3 Climate change and risk management
The growing impact of climate change is prompting insurers to develop solutions that address environmental risks.
Deloitte reports that over half of U.S. state insurance regulators expect climate change to significantly impact coverage availability, underwriting, and risk modeling assumptions over the medium to long term. McKinsey’s analysis showed that tidal flooding could negatively impact the market value of exposed homes by the equivalent of 5 to 15 percent in 2030 and 15 to 35 percent in 2050, all else being equal.
Sources:
Deloitte - How insurance companies can prepare for risk from climate change
McKinsey Global Institute: Will mortgages and markets stay afloat in Florida?
#4 Technological disruption
The rapid pace of technological change presents both opportunities and challenges. AI will enable insurers to more efficiently ingest risks, enrich underwriting with third-party data, and better curate the areas of risk on which underwriters should focus. Insurers must invest in new technologies to improve underwriting efficiency and precision and to enhance the customer and underwriter experience, while also managing the risks associated with these innovations.
While technology leaders in the insurance industry are investing a higher percentage of their operating expenses in IT, one study suggests that only 5% to 10% of carriers are consistently capturing value from these data and technology investments.
Source: Insurers can parlay technology into a competitive edge
#5 Talent acquisition and upskilling
Attracting and retaining talent, along with continuous upskilling in areas such as AI and analytics, is becoming crucial as the industry evolves. Given the changing skillsets required, there is a significant opportunity for insurance talent to accelerate their careers.
A 2024 KPMG survey of insurance industry CEOs shows that 93% expect to increase the size of their workforce over the next three years, while 62% are concerned that talent gaps may affect their business. Meanwhile, according to Korn Ferry, 67% of employees would stay with a company if offered opportunities for career growth and upskilling, underscoring the importance of investment in continuous learning to retain top talent.
Sources:
KPMG 2024 insurance CEO outlook
Talent acquisition trends 2025
#6 Regulatory changes
New regulations and compliance requirements are shaping the way insurers operate, particularly around data privacy and consumer protection. For example, new SEC rules require disclosure of material cybersecurity incidents within four days of determining their materiality, creating increased exposure for financial lines products, such as Directors & Officers insurance.
With the rise of new technologies, regulators are stepping up efforts to ensure transparency and fairness in insurance practices. For instance, new frameworks are being implemented to manage the use of artificial intelligence (AI) in underwriting and claims processing, such as those in Colorado, aimed at preventing bias and ensuring fairness in AI-driven decisions.
Source: 2025 global insurance outlook: Evolving industry operating models to build the future of insurance
#7 Political landscape
A change in the presidency can significantly impact the commercial insurance landscape through various economic, regulatory, and legislative shifts.
While insurance is largely regulated at the state level in the U.S., the possibility of increased federal oversight of issues such as climate change and the solvency of systematically important financial institutions (SIFIs) needs to be carefully monitored.
Source: 2024 insurance regulatory outlook Balancing profitability and regulation in the insurance industry
#8 Systemic cyber risks
As the world becomes more connected, there is a growing gap between what is insured, how that risk is managed and the need for more bespoke solutions. Given companies’ increasing reliance on third-party platforms, the 2024 CrowdStrike incident served as a “test run” for the industry, flagging the potential for exposure to an even larger aggregation of limits should an actual threat actor be involved.
Only 20% of small and medium-sized enterprises (SMEs) are adequately covered against cyber risks, while larger firms are struggling to obtain comprehensive coverage due to the increasing scale and complexity of these threats.
#9 Embedded insurance
There are increasing opportunities to streamline access to and distribution of insurance through integrated solutions.
A recent survey highlighted that 64% of Gen Xers and 69% of Millennials are particularly interested in purchasing embedded insurance, especially when it includes flexible cancellation and automated, trigger-based claims options.
Source: Distribution Is destiny: The rise of embedded insurance
#10 Geopolitical tensions
Ongoing conflicts and a fragmented global order are major concerns, which can lead to increased instability. Major events like the Ukraine-Russia war or the Israel-Iran escalation impact the insurance industry in numerous aspects.
Geopolitical tensions, such as the Ukraine-Russia conflict and the Israel-Iran escalation, have significantly impacted the insurance industry. For instance, the war in Ukraine has led to substantial losses in the aviation sector, with aircraft owners seeking approximately $3 billion in claims for planes stranded in Russia.
Source: Aircraft owners prepare for ‘mega trial’ in dispute with insurers over planes stuck in Russia
