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Insurers Urged to Address Coverage Gaps and Build Resiliency

by Celia

A new report from PwC calls on insurers to prioritize addressing coverage gaps and enhancing resiliency in response to growing challenges from climate change and shifting customer demands. The report underscores the industry’s critical position in 2025 as it faces mounting pressures on its stability and long-term viability.

As climate change accelerates, the insurance market is grappling with escalating risks that threaten its sustainability. In response, insurers have raised premiums, imposed more restrictive coverage terms, and in some cases, exited certain markets altogether. While these measures may offer short-term financial relief, PwC emphasizes the need for insurers to seek innovative risk solutions. The report argues that insurers must not only protect lives and property but also support broader economic and social development. While acknowledging that not all risks can be underwritten and claims payouts have limits, the report stresses the urgent need for new approaches to address the widening coverage gap.

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To mitigate climate-related risks, PwC suggests that insurers broaden their efforts beyond policyholders, incentivizing individuals and communities to take preventive measures. The report recommends that insurers collaborate with community leaders to promote climate risk resilience and inform people about available government funding for related interventions.

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The report also highlights the importance of leveraging technology to enhance business operations. PwC’s survey of market leaders reveals that top-performing insurers are focusing on cloud adoption, data modernization, cybersecurity, innovation, and artificial intelligence (AI). To effectively integrate cutting-edge technologies like generative AI (GenAI), insurers are advised to reassess and optimize underlying business processes.

Furthermore, PwC stresses that insurers must ensure their operating models are adaptable to accommodate the evolving nature of work. As automation takes over routine tasks, there will be an increased need for roles centered on strategic decision-making and analytical responsibilities, positioning insurers to capitalize on the organizational efficiencies promised by technological innovations.

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