Which areas of insurance would see growth in 2025, and which would encounter difficulties?
In 2025, the insurance business is anticipated to continue to be a mixed bag, with certain industries growing and changing while others face difficulties.
The excess and surplus (E&S) insurance industry has grown “notably” over the last six years, and the usage of cutting-edge technologies is only increasing, according to Amwins’ annual State of the Market report, which was made public on Thursday. Meanwhile, there are still a lot of obstacles facing the cybersecurity and transportation industries. While the oil industry is stable, the healthcare sector is showing signs of improvement.
AI adoption on the rise
As carriers adjust to new opportunities and challenges, the professional lines industry is about to undergo a period of change. Notable patterns are emerging as expansion and innovation continue to be primary priorities.
In an effort to enhance user experiences and streamline web portals, markets are also investing more in cutting-edge technologies like artificial intelligence and application programming interfaces.
According to the survey, improved offers with more security and preventative alternatives are becoming more and more popular, and certain markets are even utilising these services to generate other revenue streams. Real estate development and telemedicine are two niche areas that insurers are seeing prospects in.
E&S, property sectors see growth
Over the last six years, the E&S industry has grown significantly, according to the research. Continued innovation in product development, entry into underdeveloped and new markets, utilising technology and data analytics, and ongoing regulatory environment adaptability are some of the main factors driving this growth.
“The E&S insurance market has a bright future, with a number of factors likely to sustain its growth trajectory,” the report stated. “The market is in a strong position to continue its upward trajectory because of its solid foundation and forward-looking approach.”
Despite two significant typhoon events that ravaged the United States this year, the real estate market is anticipated to soften as new capacity continues to join the market in 2024.
Initial damage estimates for Hurricane Helene, an inland flooding event, range from $6 billion to $12 billion. Initial damage estimates for Hurricane Milton, a wind event that is predicted to rank among the most expensive hurricanes in US history, range from $15 billion to $30 billion.
According to the survey, there is a chance that these disasters may have some effect on the real estate market in the upcoming year, although it is still unclear how much.
According to the research, “for the vast majority of carriers, we currently view the 2024 hurricane season as an earnings event, rather than a balance sheet event.”
Energy, healthcare sectors remain stable
There are indications of revival in the energy and healthcare industries. In order to reduce risks, the recently recovered healthcare sector should concentrate on operational effectiveness and collaborate with financially strong organisations.
According to the research, healthcare organisations are “not yet out of the woods” despite a dramatic improvement in their financial situation. Private equity ownership of healthcare institutions is nevertheless subject to more scrutiny, and persistent issues including labour shortages and growing supply costs persist.
Catastrophic incidents and continuous technological developments that make coverage more difficult have hindered growth in the energy sector. According to the survey, the market’s reaction to these circumstances is still unclear, and the financial weight of growing costs is still a worry.
Transportation and cyber sectors face significant challenges
The market for transport insurance is still facing many obstacles as a result of growing loss severity and economic pressures. According to the research, the general climate is still difficult for many insured, especially those who work in the transportation sector.
According to the report, capacity in this industry is still comparatively strong, but loss trends are being made worse by social inflation and the growing expenses of litigation.
Insurers who invest in cutting-edge risk management techniques and technologies stand a better chance of obtaining advantageous terms as insurers increasingly take technical investments into account when assessing risk.
The cyber insurance market is also facing increased competition and heightened risk dynamics. Capacity in this sector continues to grow, but new entrants are faced with aggressive pricing strategies from competitors.
“Emerging players and changing market dynamics are influencing capacity trends,” the report said. “This mix of new entrants and ample capacity suggests that market conditions are likely to persist into the foreseeable future.”
Capturing nuances remains a challenge
According to Amwins, it would still be difficult to capture the subtleties of a diverse market in 2025.
According to the research, “some industries are experiencing a competitive rate environment and better underwriting conditions, while others are facing the exact opposite.”
