The global insurance industry is facing hurdles in achieving consistent, profitable growth, as revealed in McKinsey’s forthcoming “Global Insurance Report 2025: The Pursuit of Growth”. The personal P&C sector, which had $1.1 trillion in gross written premiums in 2023 and grew by 9.5%, saw this growth mainly due to rate hikes rather than market expansion. This has led to affordability issues in developed markets, where the industry’s relevance is still below pre – pandemic levels.
Rapid shifts in mobility trends are transforming the sector. In 2023, electric vehicle (EV) sales rose by 35%. By 2030, EVs could make up 15% of global vehicle operations, and 30% by 2035. Their more costly components result in higher average claim costs. Asia is at the forefront of embedded insurance adoption, especially in non – life sectors, with the market expected to reach $170 billion by 2030. Moreover, natural disasters are significantly underinsured. Between 2016 and 2023, 70% of global losses from such disasters were uninsured, totaling $260 billion annually. Public life insurers are making some progress due to favorable interest rates and a new growth focus, yet they still struggle with declining relevance compared to other sectors, partly because of transparency problems and slow growth in initiatives.
The ageing global population offers a growth opportunity as wealth moves towards Generation X and retirees. Insurers will need to meet the growing demand for retirement solutions, given that the “silver” population is projected to double by 2050. In Asia, innovations like integrated digital services are improving customer engagement, with China leading the way. The commercial P&C sector has witnessed 8% annual premium increases in the past five years, and profits have grown as the industry’s average combined ratio dropped to 91%. Top – performing insurers achieve better loss ratios by modernizing underwriting and using AI for efficiencies. However, cost pressures are causing SMEs to skip certain coverages, creating protection gaps that present a significant growth opportunity if addressed with cost – effective solutions.
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