The state of P&C insurance in 2025

The release of Deloitte’s 2025 insurance-business analysis kick-started a wave of late-year reports that looked at the state of the insurance business. The slideshow summarizes several reports that turned their lenses on the property and casualty insurance sector as 2024 came to a close.

“We continue to see these weather events impacting the markets,” said Karl Hersch, Deloitte’s U.S. Insurance Leader. “And it’s not just named hurricanes. It’s the convective activity, the wildfires, the heat… This climate shift that’s driving losses continues to occur.”

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Hersch added that intense weather losses, including those in unprecedented locations, now force insurers to respond with new coverage options and mitigation strategies. “We’re going to see pricing cycles continue to shift,” he said.

On the upside, inflationary pressure is beginning to abate, Hersch said.

“Toxic mix of risks”

Brian Patillo, executive vice president at Goosehead Insurance, is one of several thought leaders who said 2025 is likely to be a time when insurance customers reevaluate coverage needs and shop for what they don’t have. “As interest rates come down and housing picks up, 2025 will be an ideal time for homeowners to reassess their insurance costs to potentially save on overall mortgage payments,” Patillo said in a prepared statement.

He added that insurance carriers will continue to become more selective in their underwriting practices. “The push for consumers to maintain their homes to prevent risks and potential policy cancellations will likely intensify, emphasizing the need for consumers to engage in loss prevention practices actively like installing water sensors or shut-off valves,” Patillo said.

“This hearing shrugs off the toxic mix of extreme weather, inflation and economic uncertainty, and legal system abuse driving up costs for both insurers and policyholders all at once. It does nothing to address climate change challenges or protect Americans from rising costs rooted in poor public policy choices, and sadly devalues this committee’s work,” Grande said in a press release. “Everyone agrees that the availability and affordability of insurance face rising risks. Regulatory inefficiencies, poor land use and forest management, population shifts to high-risk areas, and excessive litigation driven by third-party investors have also made insurance coverage more expensive. While these are daunting challenges, mutual insurers have helped policyholders through economic hardships since before the American Revolution and can help them withstand the current risks as well.”

Climate preparedness preoccupied Beazley Chief Underwriting Office Paul Bantick as the 2024 came to a close.

“There’s a significant gap between perceived and actual preparedness for climate-driven extreme weather events,” Bantick said in a statement. “Seventy percent of global businesses agree that extreme weather impacts their operations. Yet in many cases, existing resilience measures are insufficient to fully address these threats.”

Social inflation, the mainstreaming of artificial intelligence, and the global regulatory response to insurance-business challenges also are issues that are top of mind for today’s insurance business professionals. And each of these issues are further complicated by the intricacies of specific insurance products.

“While no one has a crystal ball to predict the future, there are a few things on the horizon for the insurance market in 2025,” Openly Co-founder and CEO Ty Harris said in an email to PropertyCasualty360.com “Challenging market conditions are expected to continue, with carriers likely to face increased profitability concerns due to rising claims costs and tightened underwriting. In addition, government involvement in the insurance market will remain a significant factor, pushing carriers to adapt their strategies to mitigate the impact of litigation on their business and profitability. And lastly, independent agents will continue to play an invaluable role in connecting consumers with appropriate coverage, as carriers become more selective.”