5 Key Trends Shaping the Future of the Insurance Industry by 2025
The insurance industry is set to undergo significant changes by 2025, driven by shifts in demographics, climate impacts, and geopolitical changes. These factors are reshaping the landscape both literally and figuratively, creating new challenges and opportunities for insurers. As a result, the industry will need to evolve and adapt to stay relevant in this rapidly changing environment. We can expect to see traditional approaches being challenged as insurers embrace new strategies, technologies, and business models. This will likely lead to a wave of innovation and reinvention within the sector, as companies work to address emerging risks and better meet the needs of a changing world.
1. The aging population become the dominant industry force.
With longer life expectancies and lower fertility rates, the global median age is expected to rise to 32 by 2025, up from 30.9 in 2020. However, the traditional concept of “retirement age” is evolving, alongside other milestones like marriage and homeownership. People are embracing more diverse lifestyles and aspirations, leading insurers to find new ways to innovate and create health, life, and hybrid retirement products that address the longevity risk and complex needs of an aging population.
For Generation X, the urgency of this innovation is even greater. As the oldest members of Gen X turn 60 in 2025, many are less prepared for retirement compared to other generations. In the U.S., for example, 48% of Gen Xers have not planned for retirement—7 percentage points higher than Millennials. This makes retirement services a strategic priority for insurers, who will need to rethink how they serve this economically influential group.
With more retirees than ever before, this challenge extends beyond the insurance industry. It brings interconnected risks, as healthcare providers, governments, and communities all struggle to meet the needs of an aging population in a competitive labor market.
2. Property insurance creates an existential crisis.
Personal and commercial property insurance represents about 30% of global property and casualty (P&C) premiums and has been a key driver of growth, thanks to strong rate increases in recent years. However, this growth is slowing as rising claims from catastrophic events linked to climate change push many insurers, reinsurers, and even public “insurers of last resort” to scale back or exit the market.
The devastating start to 2025 in Southern California serves as a stark reminder of how catastrophic events can impact people’s lives and communities. As awareness of these risks grows, we can expect continued action in response.
Regulatory changes, like those recently seen in California and Italy, are a step in the right direction. However, to truly address the challenge, we need systemic solutions that consider both pricing and community-level resilience. In 2025, we anticipate more public-private partnerships emerging to enhance climate resilience in the communities most vulnerable to these events.
3. Instability drives insurers to focus on what they can control—cost.
In an increasingly uncertain geopolitical landscape, the global macroeconomic environment is bound to face heightened volatility, with factors like fluctuating interest rates, disruptions in supply chains, and challenges to multinational commerce adding layers of complexity. This unpredictability will inevitably affect a wide range of industries, including insurance. However, amidst this uncertainty, insurers will likely focus on areas they can control—namely, their costs.
Costs, while influenced by external factors, are more predictable and manageable compared to the macroeconomic variables that lie beyond their immediate control. As a result, insurers will look for ways to optimize operational efficiency and reduce expenses, enabling them to maintain profitability and improve their combined ratios. A lower combined ratio—measuring the difference between the cost of claims and underwriting expenses versus earned premiums—translates to better financial performance, and for insurers, this will be a key focus in a volatile market.
While the broader economic environment may fluctuate, insurers will have more influence over how they allocate resources, manage claims, and streamline their operations. This focus on controlling costs will become essential in an environment where uncertainty is the new normal. By refining internal processes, adopting advanced technology, and enhancing data analytics capabilities, insurers can not only navigate volatility but also position themselves for long-term success in a rapidly evolving global landscape.
4. AI is the new talent segment that reshapes talent strategies.
AI is already playing a significant role in businesses today, and it’s being increasingly integrated into the workforce to boost efficiency and support better decision-making. By 2025, insurance companies will be prioritizing the recruitment and development of the specialized skills needed to scale AI across both market-facing and corporate functions. This shift will be crucial as AI continues to transform how insurers operate.
The traditional apprenticeship-based career path is being disrupted by the rise of AI. As a result, insurers will need to rethink their approach to talent acquisition and development. Rather than relying solely on internal pipelines, they’ll look beyond their own organizations to tap into external expertise. This will involve seeking out skilled professionals with a broad range of experience, from those with specialized technical knowledge to those who bring high-level domain expertise. By broadening their talent pool and embracing diverse skill sets, insurers will be better equipped to harness AI’s potential and stay competitive in an evolving market.
5. Pricing of legacy tech ends “kick the can” for CIOs.
Carriers and CIOs who are hoping to extend the life of their legacy technology by delaying costly modernization efforts may find themselves only postponing the inevitable. The reality is that the industry will face steep price increases for outdated systems, much like we’ve seen with products such as VMWare. By 2025, the risks and costs associated with modernization will shift dramatically, compelling insurers to take action they’ve been putting off for years.
Despite this challenge, we remain optimistic.
Four years ago, we published our “Revenue Landscape 2025” report, forecasting that the global insurance industry’s revenue would reach $7.5 trillion by the end of 2025. With current projections, the industry is on track to surpass that estimate, with global premiums expected to hit $7.7 trillion. The key question now is whether this premium growth will translate into profitable growth, which remains a shared challenge for the industry.
We believe the insurance sector will rise to meet the challenges of 2025 and use this opportunity to reinvent itself. We’re excited to be a part of that transformation.