Global premium growth is expected to slow next year, while insurers face challenges from weather-related losses, rising legal risks and broker consolidation, a Deloitte report says.  

Heightened competition, falling rate momentum and emerging cost pressures such as tariffs and reserve adjustments are likely to put pressure on premium growth for property and casualty insurers. 

“Margins are likely to deteriorate in both personal and commercial lines due to ongoing trade policy uncertainty, persistent supply chain disruptions and labour shortages – factors that are likely to drive up goods prices and wage inflation,” the global outlook says.

Broker consolidation is pressuring carrier negotiating power, large corporates are increasingly self-insuring through captives, and alternative risk players are entering the market.

Tailwinds include generative artificial intelligence and geospatial analytics advancements that are helping with real-time monitoring and enabling insurers to predict and minimise losses.

Deloitte says regulators are supportive as insurers emphasise data-driven and science-based approaches to improve risk awareness. Insurers and government bodies are taking a more proactive approach to managing risks.  

Monetising risk management offerings may become more significant, with Deloitte estimating fee-based revenue for US insurers will grow from $US21.6 billion ($33.3 billion) in 2023 to $US49.5 billion ($76.2 billion) by 2030.

Global life insurance growth is forecast to decline, as US policy uncertainty may cause cautious consumers to delay or reduce their coverage, while in emerging economies insurers are benefiting from low penetration amid expanding middle markets.

Deloitte notes investments in private credit are expanding worldwide despite increasing concerns about lack of liquidity and minimal regulatory oversight.

Overall, the insurance industry is “buzzing with AI activity”, but realising its value is a work in progress as many struggle with fragmented, messy data sprawl and outdated systems, according to the report.

“Success may not hinge solely on the speed of AI adoption but on how effectively insurers embed digital tools into the workflow and transform workforce capabilities to cultivate a sustained human advantage.

“It is important for insurers to preserve legacy knowledge, recruit next-generation talent, reskill the mid-career workforce, and embrace the evolving role of innovation hubs.”

The report is available here.