In comparison to what was a tumultuous 2023 for insurers, the last twelve months have been, perhaps surprisingly, relatively stable overall for the global Property and Casualty (P&C) market.
However, 2024 was not a benign year, with more severe weather events, including Hurricanes Milton and Helene, convective storms in the US and Canada, and devastating flooding across Central Europe. Yet despite these incidents, Aon’s ‘Global Catastrophe Recap’ indicated that total economic losses for the first three quarters of 2024 were approximately $258 billion, significantly lower than the losses recorded for the same period in 2023.
The cyber threat continued to escalate in 2024, with reports showing increases in both the frequency and severity of cyber claims. Additionally, geopolitical instability has persisted, marked by a record number of elections, changing governments, ongoing global conflicts, inflationary pressures, volatile risk landscapes, and evolving customer needs, all of which have further complicated the landscape.
Despite all these challenges, the global P&C market managed to maintain a relatively stable footing. According to McKinsey, the commercial P&C sector exhibited strong growth, with premiums increasing by an average of 8% annually over the past five years. The Excess & Surplus (E&S) market has also seen rapid growth in the US, fuelled by rising property insurance premiums from catastrophe-prone states. According to a report by Reuters, California, Florida and Louisiana have experienced the biggest growth in E&S property business since 2018.
We spoke to a number of carriers for our new State of Underwriting in North America 2025 report, and they agreed that 2024 was a ‘year of transition’, the market stabilising after Covid and finally softening in several areas.
In personal lines, premiums grew by 9.5% in 2022-23, outpacing nominal global GDP. However, affordability remains a significant concern due to rising asset prices, repair costs, and reinsurance expenses. The coverage gap between mature and emerging economies has also widened.
New risks emerge and evolve all the time. Insurers are telling us that cyber, climate, environmental, and property risks are their top concerns in 2025, but we’re also seeing growing challenges in human capital, Worker’s Comp, Trade Credit, and Supply Chain insurance.
As we observed at the end of 2023, pressure often drives innovation, and this trend continued in 2024. Underwriters have risen to the challenge by investing heavily in technology, particularly AI, to enhance processes, improve efficiencies, and drive profitable growth. Insurers have also embraced risk management as a critical tool to assess and mitigate risks.
A new generation of algorithmic underwriters has emerged, demonstrating that effective data management and new operating models can drive product innovation and improve combined operating ratios (COR). These ‘enhanced underwriters’ are now considered a “fundamental” part of the future of Lloyd’s, with a report by the Lloyd’s Market Association (LMA) and Oxbow Partners suggesting these models may become “the new normal”.
Last year, we predicted significant changes driven primarily by external factors. These stressors have not dissipated. Industry trends such as increasing competition, growing complexity, rising regulation, and an ageing workforce continue. However, we believe 2025 will be a year focused on refining internal processes, cultures, partnerships, and technologies that will shape the future of underwriting.
While this is expected to be another challenging year, we are confident these 10 trends will significantly influence the underwriting landscape and help underwriters better navigate the complexities ahead.
TREND 1
Data, data, data
As you’ll come to see, the theme of data runs right through this annual outlook, underpinning all of the key underwriting trends in 2025.
Data is the number one asset an insurer can have, and the single biggest factor shaping underwriting as we know it. The availability of data – and the speed at which we can ingest, interrogate, and use it to inform our processes – is key to profitable, sustainable underwriting and risk selection.
But the theme runs deeper than that. Alongside the practicalities of working with data, we also need to broaden the skills of our people to understand it, the partnerships to provide and share data, the mechanisms by which we’re confident that we’re using good data, and the systems used to collate, store, access, and use this data.
To truly reap the benefits of the proliferation of available data, the industry needs to look closely at its systems, processes, and partnerships to ensure they’re getting access to the right data, at the right time.
Kelly Cusick, Managing Director at Deloitte, was keen to highlight the critical importance of improving data literacy in 2025:
There is an element of data literacy and AI, where not all underwriters need to fully comprehend how large language models work; but they need to know enough that if something is presented to them via AI, they should be able to understand how it was derived and how should it be interpreted. Today, the broad population of underwriters may not yet have data literacy or analytics literacy at the desired levels.
Having a robust approach to data must be a strategic priority for 2025, but we all need to play a role in bringing the pieces together to ensure we have the skills, technologies, and processes to use it in the most effective ways.
TREND 2
A mixed market
Last year we noted that the market appeared to be softening in some areas, and heading into 2025, little has changed.
The upcoming “mixed market” was the subject of our November INFUSE webinar featuring industry experts Jennifer Kyung, CEO and Founder at NextGen Underwriting, Martina Conlon, Executive Principal at Datos Insights, and Tandis Nili, Managing Principal at Epic Insurance Brokers.
The market condition in 2025 will depend on the line of insurance. Some lines show immense stability, and a few remain volatile. This means we are looking at a mixed market.
There are still pockets of softening – auto insurance, for example, and some lines in Specialty and Excess & Surplus – but other lines remain stubbornly hard. Property insurers, for instance, are still grappling with pricing under the shadow of climate catastrophe, and casualty insurance, particularly in the US continues to face challenges.
Under these conditions, underwriters will be forced to make some difficult decisions, no matter where they sit in the cycle. Those in a soft market may be pressured into broadening their acceptance criteria and focusing on volume rather than quality of risks. In contrast, those in harder lines have to make faster, yet more accurate risk decisions in line with more stringent criteria.
Navigating this volatile market effectively relies on data. Underwriters need data to get a handle on market movements, manage pricing, and assess risk, but for Martina, the type of challenge presented by data has changed considerably, from getting accurate data in the first place to being able to use that data efficiently.
The challenge has shifted to how to assimilate and analyse the vast amounts of data you may have about a particular industry or risk.
Wherever they sit in the cycle, underwriting efficiency will be a top priority for all carriers, something that will be achieved by embracing AI.
The panel discussed how AI could be key to opening up a “virtuous circle” of data, but also drive operational efficiencies by automating many manual processes.
Each of us as individuals, or members of our organisations need to think about how we can engage AI in a very smart way to enhance what we have to do. Don’t fight it. Embrace it.
TREND 3
Alternative capacity
In 2024, we witnessed a significant surge in alternative capacity models, especially in the P&C sectors, as traditional capacity contracted. This shift has introduced new business models such as direct participation by insurers through bond issuances, public-private partnerships for large risks, and AI-powered platforms that match risks with investor appetites. Managing General Agents (MGAs) are also attracting more capital through various pure and hybrid fronting companies, with rising interest from non-traditional sources like pension funds and private equity.
This trend is driven by the need to diversify risk and exposure, lower the cost of capital, and address the imbalance between capacity supply and demand. Diversifying capital is beneficial as it eases pressure on (re)insurers and helps carriers avoid single points of failure in the face of high claims costs.
Specialist MGA services platform OneAdvent has been exploring the explosion in alternative capacity, last year partnering with the UK’s first hybrid-insurer, Bridgehaven.
This influx of hybrid and alternative capacity options provides increased flexibility and greater access to new capital sources both within the existing insurance ecosystem and externally. We see this as a significant boost for the underwriters at MGAs, who can bring genuinely new capacity to meet the evolving needs of their clients. The hybrid-fronting model has also created better visibility between the participants in the value chain and will hopefully lead to stronger and more long-term relationships.
– Tim Quayle, CEO, OneAdvent
So, what does this mean for underwriters?
Underwriters will face increased demands for transparency and visibility of their underwriting data. Investors seeking long-term capacity arrangements will require assurance that their capital is secure and well-managed. To attract these investors, underwriters must proactively demonstrate that they are building high-quality portfolios of risk to deliver profitable returns.
The emergence of alternative-capital platforms, powered by sophisticated AI and machine learning, will further underline the importance of data-driven underwriting. These platforms will analyse and model risk to match insurer risks with investor appetites, relying heavily on real-time, accurate data. Underwriters will need to ensure they can efficiently ingest and optimise this data to remain competitive and reap the benefits of alternative models.
TREND 4
Rise of portfolio underwriting
There was an increasing shift towards a portfolio approach to underwriting in 2024, and we expect that to continue at pace this year. There are several reasons for this: advances in the sophistication of technology and data analytics, the need for more efficient risk assessment, pricing and avoidance of risk accumulation, and a general need to control portfolios and drive stronger performance.
This shift marks a transition from traditional, reactive, and backwards-looking processes to proactive, data-driven strategies aimed at enhancing overall performance and competitiveness.
By adopting a portfolio-level view, underwriters can better understand and refine their risk appetite, identify and mitigate high-exposure areas, and swiftly adjust their product strategies in response to emerging trends in their data.
Over the past few years, new market entrants like Ki Insurance, Vave, Aurora, and others have exemplified the effectiveness of portfolio underwriting by embracing an algorithmic approach.
This smart, data-driven method leverages advanced algorithms, machine learning, and AI to automate the risk assessment, underwriting, and pricing of insurance policies.
Within our algorithmic framework, we focus our predictive analytics and machine learning in portfolio management and monitoring, to identify trends quickly, and make decisions on any changes required. We can then leverage our technology to deploy decisions made and changes to the algorithms with speed, allowing us to be agile and responsive, to better manage a portfolio of business.
– Bijal Patel, Co-founder and Chief Technical Officer, Aurora
Despite the clear benefits of portfolio underwriting, there are still barriers to widespread adoption. A recent hyperexponential ‘State of Pricing’ report revealed that while underwriters recognise the importance of portfolio insights, 8 in 10 are concerned about the shift from risk to portfolio underwriting, citing the need for new skill sets, greater knowledge of data analytics and systems as hurdles to be overcome.
Most market commentators agree that transitioning to data-driven underwriting has become a strategic imperative. As technology advances and carriers progress significantly in digital underwriting, we anticipate a growing adoption of this underwriting model in 2025, with more companies embracing this approach.
TREND 5
Addressing the insurance talent shortage
The clock is ticking for the insurance industry. The US Bureau of Labor Statistics has reported that the insurance industry is expected to lose around 400,000 workers through attrition by 2026, a trend that is mirrored in the UK market. The Chartered Insurance Institute (CII) has noted that approximately 25% of the UK insurance sector is due to retire within the next 10 years, while only 4% of young people consider an insurance career a viable option.
The London Market Group (LMG) has been working hard to increase the pipeline of new talent in the UK. It already runs a Future Academy programme, offering work placements to sixth-form students, and this year it is set to introduce its ‘Talent Hub’. Expected to launch this quarter, the ‘Talent Hub’ is a single point of assessment and access to the London Market fed by new and existing school outreach programmes.
Similar efforts are ongoing in the US. The Wholesale & Specialty Insurance Association (WSIA) has a number of programmes in place to develop a better awareness of the industry, and connect students to career opportunities in specialty lines.
The talent gap risks being exacerbated due to the increasing pressures underwriters are under to move fast, manage larger volumes of work (and data), and keep growing profitably in a softening market. Therefore, not only do we need to bring people into the industry, but we must also ensure they’re well-supported and looked after to keep them.
Companies across the industry are alive to these challenges and have been exploring ways to support underwriters and increase engagement and talent retention. One important area is digital skills. According to a December 2024 survey by Davies, 63% of senior managers believe lack of digital skill is an issue in their workforce, with 30% describing it as ‘a very serious issue’. Investing in people by arming them with the digital skills they need to thrive in an increasingly digital market will be key to ensuring they remain engaged.
It’s unlikely that the looming talent vacuum can be filled quickly. Therefore, it is crucial to and pass on the rich knowledge we’ve accumulated over decades.
One promising approach is the concept of hybrid teams, which combines AI and human expertise to enhance operations, improve risk assessment, and deliver superior customer experiences. This balanced approach leverages the strengths of both AI and human judgement to achieve sustainable growth, operational efficiency, and competitive advantages.
By introducing AI as a silent team member, or AI assistant, insurers can offload repetitive and manual tasks from underwriters, allowing them to focus on more creative and value-added tasks that drive business growth. Working with AI also requires new skills, such as data fluency, coding, innovation, and creativity, which may be more appealing to incoming younger talent.
These AI tools enhance operational efficiency, helping carriers achieve more with fewer resources, and mitigating the impact of the talent shortage.
Caroline Bedford, CEO of EDII, frequently discusses the role of AI in helping to address talent gaps in the insurance industry:
Over the next 12 months, using an AI ‘helper’ to make everyday Underwriting tasks more efficient will be as commonplace as using the ‘auto-sum’ function in Excel, or ‘Save As’ in Word. It will no longer be new, it will be the norm.
If you’re not supporting your Underwriters to upskill and become AI-curious, and AI-competent, you’re falling behind. As Karim R. Lakhani from Harvard Business School says – “AI won’t replace humans, but humans with AI will replace those without.”
Those businesses that embrace AI to provide deeper insights, cascade knowledge, elevate their offerings and advance their services will be the winners in the race for talent in the insurance world.
We believe 2025 will be a turning point for the use of AI in narrowing the talent gap and offering underwriters new skills to stay engaged and effective in the market.
TREND 6
Efficiency v. effectiveness
Will this finally be the year that underwriters can achieve both effectiveness and efficiency? We think so.
These are two of the most important pillars of robust underwriting, but for a long time, they’ve fallen into contention, jostling for pole position on the prioritisation list.
Effective, profitable underwriting is an art, particularly for complex, specialty risks. Experienced underwriters have honed their skills over the years, using their expertise and trained judgement to navigate these risks.
But efficiency cannot fall by the wayside. McKinsey’s 2024 Global Insurance Market Report highlights that while 40% of an insurer’s performance is driven by the lines of business it participates in, 60% of performance is driven by how it operates.
Historic attempts to increase efficiencies in underwriting have often come at the cost of effectiveness, and vice versa.
However, this is changing. The volume of quality data and broader application of AI has the potential to increase underwriting effectiveness exponentially, but to reap maximum benefits we have to be able to access and interrogate data sets more efficiently.
Many of the underwriting platforms available today are built to fuel these priorities and are fast becoming critical for commercial success.
Experts at Datos point to underwriting workbenches as being critical to modernising and streamlining underwriting processes and driving profitability, helping carriers to prioritise both efficiency and effectiveness. Alongside Policy Administration Systems (PAS), Billing, and Claims, Underwriting Workbenches are emerging as a fourth core system, essential for driving underwriting success.
Increasing competition, growing complexity, rising regulation, and an aging underwriter workforce are putting pressure on commercial P&C insurers. In response, insurers are turning to underwriting workbenches to improve underwriting efficiency and effectiveness. These platforms streamline the underwriting process to boost productivity, quality, and collaboration by providing robust native capabilities, and integrating various data sources, tools, documents, and eco-system solutions into a single user experience.
– Martina Conlon, Executive Principal, Datos Insights
The power for an underwriter today is having fewer systems to log into, ideally with no manual data entry at all. One significant efficiency for underwriters in 2025, both in terms of speed and accuracy in managing risks, is having an underwriting workbench that seamlessly connects to placing data aggregator tools, such as WCL. This means underwriters can interact and respond to risks placed on multiple electronic trading platforms and portals, without having to leave their workbench.
TREND 7
Everything, everywhere, all at once – welcome to the era of polycrisis
The global landscape can be summed up in one word: volatile. Accelerating climate risks, pockets of geopolitical instability, inflationary pressures, economic downturns, and health crises all combine to form a complex, interconnected web of crises that risk and insurance experts call a “polycrisis.”
The term was first coined by the World Economic Forum in 2023, but the effects of this polycrisis have been felt more intensely over the past year, resonating throughout the global insurance market. Corporate risk managers and insurance buyers are now actively seeking new strategies to manage the impacts of these concurrent crises and are looking to carriers for support.
Analysts believe this interconnectivity of risks will be one of the four major challenges facing insurers in 2025. In a recent Insurance Post article, editor Emma-Ann Hughes reflects on what ratings agency AM Best likens to a “big bowl of spaghetti”, explaining that “if you pull on one risk, all the others could shift too.”
Whereas previously, the industry could look to the past to inform their underwriting decisions for the future and consider risks in isolation, the nature of risk today renders this impossible.
Today’s complex risk landscape demands a deeper understanding of how these risks interact and compound each other.
To effectively navigate the polycrisis, underwriters need access to high-quality, real-time information. This data is crucial for building accurate risk models and simulations that help predict and mitigate the impacts of interconnected crises.
We don’t yet know what other shocks this year may have in store, but underwriters will need to be agile. They must be able to adapt their underwriting strategies quickly in response to changing risk profiles and emerging risks. This will involve leveraging technologies like parametric solutions and digital platforms to manage risks more effectively.
TREND 8
Winning together: joining the dots for better risk management
This may be the year of sensory overload for underwriters. As the Internet of Things (IoT) has become more sophisticated and deeply embedded in all areas of life, underwriters are presented with a proliferation of data. This wealth of data can drive more profitable underwriting and power risk management initiatives, but without the right technology and data partners, the sheer volume of data risks overwhelming hard-working underwriters.
The IoT insurance market was estimated to be worth approximately $49.40 billion in 2024 and is expected to grow to $76.73 billion by 2029, and its explosion is unsurprising.
IoT devices collect a wealth of granular data from sources such as telematics, smart home devices, fitness trackers, and industrial sensors. This data enables insurers to assess risks more accurately and proactively prevent losses.
One area in which IoT insurance is gaining real traction is Property. Smart sensors and monitors are being increasingly used in residential and commercial properties to detect potential risks such as fire, water damage, and theft.
Héléne Stanway, President of the SENSE Consortium, understands the power of IoT data and how it can help underwriters drive better, more profitable results, she explains:
IoT and real-time data are a significant opportunity for underwriting physical asset risks, yet most underwriters are still lagging in its adoption. While smart sensors and devices provide real-time insights into risks like fire and water damage, embracing IoT data isn’t just about staying competitive; it’s about shifting from reactive risk assessment to proactive prevention. To truly harness IoT’s potential, the industry must close the gap between data collection and actionable underwriting intelligence.
Beyond IoT data, underwriters can benefit from a wealth of information on financial risk, company ownership and linkages, ESG performance, cyber risk, shipping, and much more, on which to base underwriting, claims, and pricing decisions.
This data explosion is a gift to underwriters, but they must implement technologies and partnerships to help streamline and operationalise this data or risk not being able to see the full picture. Instead of relying on insureds to provide this data themselves, working with third parties such as D&B, Lexis Nexis, Addresscloud, and Hazard Hub, is a good way for underwriters to ensure the information they are working with is accurate and up to date.
The growing partner ecosystem in insurance will be key to maximising this data. Last year, we spoke about the growing trend for collaborative competition (co-opetition), but this year, we expect to see these partnerships deepen and become more strategic.
Our data partner Dun & Bradstreet, helps us to deliver meaningful data insights to our customers via our Underwriting Workbench, they explained how finding the right data partner to help underwriters join up the dots is vital:
Insurers who leverage the power of data will set a precedent. It’s been proven that business firmographic, financial and credit health are predictors of insurance losses, so having the highest quality data in these areas is fundamental. Working with a third-party such as Dun & Bradstreet, insurers can break down siloes, and match, expand, and enrich their data to ensure it’s accurate, up-to-date, and joined up. This allows for an enhanced, single source of truth for each insured from which to extract meaningful insights and make smarter decisions.
– Zulf Raja, Insurance Industry Lead, Dun & Bradstreet
TREND 9
2025: the year AI in insurance underwriting goes mainstream
AI has been a dominant theme in the insurance industry for several years, but 2025 is the year when talk must turn to action. Our recent survey with Intelligent Insurer reveals a significant shift in attitudes toward AI, with a marked increase in optimism and action.
It showed that 85% of the underwriters surveyed believe that successfully deploying AI in underwriting will give insurers a stronger competitive advantage, and 65% see AI as the biggest opportunity for improving profitability and performance in the coming year. This is a stark contrast to the caution and fear reflected in our 2023 survey.
Augmented underwriting, where human underwriters are seamlessly complemented by AI tools, is here to stay. Companies are now overcoming cultural, structural, and operational barriers to adoption and are moving forward at pace to reap the benefits of AI.
Our deep dive into AI’s impact with European insurers uncovered a significant focus on improving the daily experience of underwriting teams, beyond reducing processing times or workloads. AI helps these teams by automating tedious tasks like extracting data, navigating multiple systems, and resolving fragmented information. These improvements simplify workflows, reduce frustration, and create a more engaging environment for teams, making AI a key enabler of not just operational efficiency but also employee satisfaction.
– Jakub Wróblewski, London Market Practice Lead, Sollers Consulting
Imagine, a clear inbox, where the most important emails have been flagged for you to review and manual tasks have been automatically dealt with. AI has been deployed to read, triage and prioritise email submissions, automatically filtering out the “junk” and allowing you to spend more time thinking about and underwriting the important risks.
You would have all the data you need for a risk address to hand, without having to frantically Google or switch between different risk and perils apps. AI has automatically mapped your risk address, shown you all the associated peril and exposure information, and calculated how taking on that risk might impact your whole portfolio, all before you can begin typing.
A pre-set underwriting criteria that can be changed depending on your appetite and in line with market shifts. AI has helped you to define what’s acceptable and processed your submissions in line with this.
This is how we picture the underwriting evolution. And these benefits are all within reach right now.
The year 2025 may usher in a new reality for the insurance industry, where AI moves beyond being merely a vision of the future to becoming an integral part of daily operations. AI in underwriting is not just a tool for automating processes but also a true catalyst for transformation – identifying hidden patterns and trends, personalizing customer offerings, driving operational efficiency, enhancing decision-making precision, and enabling more effective risk management across entire portfolios.
However, the challenge for insurers goes beyond simply implementing the technology. Equally important is effective and advanced data collection, the adaptation of processes and the evolution of organizational culture to fully harness the potential that AI offers. Success hinges on relying on the available data, selecting the right technology, forging strategic partnerships, and maintaining a clear vision for the future.
– Aneta Gajek-Wisniewska, Board Member, Decerto
It’s clear that implementation is not as simple as activating an “AI Assistant.” Insurers are at various stages in their journey towards being AI-enhanced and data-driven. In 2024, we developed an Underwriting Maturity Framework to guide companies through the practical steps towards a data-driven future.
Start big or start small, this is the year to get started.
TREND 10
Managing change
This could be a pivotal year for underwriters, as many tools exist to improve the underwriting function, but to successfully embed the data and technology advancements needed for success, they must carefully consider their approach to change and how, and when, they adopt and embed new processes and technologies.
The concept of “transformation” is often used when talking about the need to evolve, but for many businesses, this is a frightening prospect. Transformation sounds like a huge and expensive project, and many simply don’t know where to start. Others see transformation as a lofty end goal, losing focus on the many reasons for change, and the broader objectives for what they’re trying to achieve.
It is clear underwriting has evolved over the last 5 years. However, approaches to underwriting transformation have historically taken a siloed approach, with operational changes made in isolation without considering the wider impact of those changes and the many different pockets of the business that interconnect with the underwriting function.
To effect meaningful change in 2025, experts at Altus Consulting argue that we should reframe “transformation” as “modernisation”, and understand the processes and capabilities, along with a change in mindset to shift away from wholesale, disruptive change, to a more considered, targeted approach.
There is no doubt 2025 will see underwriting capabilities improve through the adoption of new technologies, but it is the connectedness and the manner it is tightly aligned to the human experience, ensuring success, our view that an iterative modernisation approach to change is vital in delivering both underwriting and operational improvements.
– Matt Carter, Practice Director – Insurance Specialty Markets, Altus Consulting
Conclusion
The trends shaping underwriting in 2025 represent an evolution of what we’ve seen in previous years rather than a fresh new start with novel challenges and opportunities on the horizon. Attitudes towards technology have shifted considerably and we’ve gone from talking about change to enacting it.
One thing resonates throughout, and that’s the critical importance of data in bringing about underwriting evolution. The ability to properly gather, share, and utilise data for effective and efficient underwriting is of paramount importance, and this year we expect to see more companies taking action to embed and expand their approach to data and technology.
We’ll be there throughout the journey, and we continue to work with our customers to navigate these trends, arming them with the technology and data they need to stay ahead of the curve.
We’d love to hear your thoughts on how underwriting will continue to evolve in 2025 and beyond, so please share your thoughts with us at hello@send.technology.