Interest rates continue to drive strong investment income for insurers. Nevertheless, the effects of social and economic inflation continue to accumulate, adding pressure to insurers’ liability reserves and pricing. How much this impacts 2024 remains to be seen, but additional scrutiny around risk selection and program structure is expected. In this dynamic environment, tailored analytics and creative program design are now table stakes for insurance buyers.
Growing uncertainty
Property and casualty insurance market conditions are largely stable and predictable at the start of 2025. Warning signs, however, are emerging — chiefly surrounding the economy. Will inflation head back up? What impact will tariffs have on the cost of goods and services? How will the Fed move forward on interest rates? Additional concerns for insurers and businesses include social inflation, climate change, and a volatile geopolitical landscape. Against this backdrop, insurance buyers should remain proactive and flexible. They should regularly evaluate program efficiency, stress-test their programs against different market scenarios, and engage with insurers to understand how shifts in capacity, pricing, or underwriting appetite could impact outcomes.