2025 PREDICTIONS
Predictions, Wishes and the P&C Industry in 2025
The end of the year is celebrated with our most cherished holidays, special food, gift giving and some downtime to reflect and recharge for whatever lies ahead in the New Year. It’s somewhat cathartic to think about what’s likely and possible but even more productive to apply some research and rigor to support predictions, regardless of their eventual accuracy.
In the business world, it’s the time of year for pundits to look ahead and around corners to make their predictions while forecasters highlight financial models and articulate what to expect, whether at micro or macro levels.
The P&C industry, by design, looks back to look ahead when it comes to rate making and risk modeling. Much of the 2024 story will be told throughout the first half of 2025 as earned premiums and other lagging financial results filter in and are officially reported. Considering the last three years of insurance-in-crisis, with new signs of underwriting profits returning, it’s refreshing to look forward to 2025.
It’s also a good time to mix in a sprinkle of wishful thinking and optimism. So we will call this our 2025 P&C “Wish List,” knowing full well that moving the needle in insurance is like turning a cargo ship.
- Rates stabilize, and competition begins to warm up, adding market capacity. As personal lines auto is forecast to be around 98.4%, per S&P, there is renewed optimism about profitability. Reinsurance rates have stabilized, and confidence in some of the most challenged markets in Florida and California is pointing in a positive direction, with insurers returning to write business. While E&S lines have absorbed displaced capacity, these encouraging signs of stability are welcome news, despite consumer and small business premium pain and protection gaps that will extend in the new year and beyond.
Alan Demers and Stephen Applebaum
10 Tech Breakthroughs Likely in 2025 | Insurance Thought Leadership
Expect even more AI than you saw in 2024, powering search engines; agentic AI; smaller, more precise generative AI models; robotaxis and robots. And that's just for openers.
Now that we've come out the other side of the holidays, 'tis the season for predictions about what awaits us in the coming year, and the MIT Technology Review just served up its list of the 10 biggest technology breakthroughs that it expects to occur in 2025.
One of the AI applications cited could accelerate the efficiencies insurance companies are finding with generative AI, and another could have a profound effect on how insurance companies market themselves and generate leads. Still others could make 2025 the year of the robotaxi and possibly get you closer to having that robot valet you've always wanted. Other technologies on the list would have far smaller impacts for the insurance industry but would create challenges and opportunities by changing the risks in major industries, such as steel and ranching, while slowing the rate at which the world is heating up.
The Review isn't always right -- and I have reservations about a couple of their projections -- but the publication is always thought-provoking.
Paul Carroll, editor-in-chief, Insurance Thought Leadership
State of Auto Insurance in 2025 - ValuePenguin
Car insurance prices are expected to increase an average of 7.5% in 2025.
That's a significant slowdown from the past two years, when car insurance rates rose an average of 16.5% in 2024 and 12.0% in 2023.
The average cost of car insurance nationwide in 2025 is $175 per month for full coverage. Nevada, Florida and Michigan are the most expensive states in the U.S. for car insurance, all with prices exceeding $250 per month.
2024 In Review
2024 saw the second-highest number of tornadoes on record
With a total of 1,735 confirmed twisters, 2024 became the second-worst year for tornadoes on record, according to AccuWeather. There were also more EF2 or stronger tornadoes than have been seen in the U.S. since 2011.
The traditional “tornado alley” saw the highest number of tornadoes. When looking at individual states, Texas led the pack with 169 reported tornadoes, followed by Nebraska and Iowa which each saw 131. Illinois and Missouri rounded out the top five states for tornadoes with 126 and 105 twisters, respectively.
Florida experienced an unusually high number of tornadoes in 2024 with 105; largely driven by hurricane activity. According to AccuWeather, Hurricane Milton, which hit the state in October, spawned more than twice the state’s daily record for number of tornadoes. Milton was also the first hurricane since the 1960s to create more than three EF3 tornadoes.
While it may have set records, Milton was far from the only hurricane to drive up the number of tornadoes in 2024. According to AccuWeather, the total number of twisters spawned by hurricanes last year are as follows:
Beryl: 68 tornadoes Debby: 24 tornadoes Helene: 35 tornadoes Milton: 46 tornadoes Others: 5 tornadoes
US insurance rates reflect mixed trends in 2024
The US insurance market experienced varying rate trends in 2024 across personal and commercial lines, with composite rate increases reflecting both moderation and long-term upward pressure, according to MarketScout, a division of Novatae Risk Group.
While personal lines saw their highest annual rate increase in 12 years, commercial rates showed a deceleration compared to 2023.
Composite personal lines rates increased by 5.79% for the full year, with a moderation to 4% in the fourth quarter. Hurricanes Helen and Milton, while causing less insured damage than expected, contributed to reduced homeowners’ rate increases in Q4.
However, uninsured flood losses left significant gaps in coverage for many homeowners, according to Richard Kerr (pictured), CEO of Novatae.
By category, homeowners insurance for properties valued under $1 million rose 3.3% in Q4, while those over $1 million increased 5%. Automobile insurance premiums grew by 5.3%, while personal articles coverage rose by 2.3%.
Kerr noted that while the Q4 moderation was a positive shift, the 2024 rate increase overall marked a significant adjustment, reflecting market trends that could evolve further in 2025.
MarketScout: 2024 Composite Personal Lines Rates Up 5.8%; Commercial Rates Up 3.8%
According to the MarketScout Market Barometer, the composite rate for U.S. personal lines increased about 5.8% in 2024 — the highest yearly jump in a dozen years.
For the last quarter of 2024, the composite rate went up 4%, said Dallas-based MarketScout, a division of Novatae Risk Group.
Richard Kerr, CEO of Novatae, said Hurricanes Helen and Milton caused less insured damage than anticipated, and pricing for homeowners insurance fell slightly in Q4. But the composite rate was up at least 5% for auto insurance and home valued at about $1 million.
Commentary/Opinion
Technology’s growing role for handling claims fast and effectively
The claims experience is an inflection point for many insurance customers. It’s how they measure satisfaction with their insurance carriers. But handling claims has become more complex—not less.
The growing frequency and severity of natural disasters have required insurers to manage massive claim volumes in short periods. Hurricanes Helene and Milton, for example, generated more than 400,000 claims in Florida alone.
Volume is only one part of the problem. Insurers face additional hurdles related to cycle time, indemnity accuracy, and expense—all of which hinge on the ability to leverage good insurance adjusters.
Limited number of adjusters. There’s a talent gap and natural disasters only exacerbate this problem. During large-scale events, adjusters are overburdened, which can extend claim cycle times.
Assessment accuracy. Insurers rely on adjusters’ knowledge of the local area, expertise in property damage, and familiarity with state regulations. However, after catastrophic events, they often work with whoever is available, and if the adjusters are coming from other regions, they may lack local knowledge and specialized skills, leading to errors in claim assessments.
High cost. On average, it costs over $1,000 for an adjuster to handle a single claim. In the aftermath of a natural disaster, this expense multiplies quickly, placing a significant financial burden on insurers.
Emerging technologies are helping insurers address these challenges, from improving decision-making to reducing the need for on-site visits. Here are five ways insurers are both speeding up and enhancing the claims process today.
Ryan Stokes is Vice President, Business Development, Claims TPA & Solutions at Xceedance
News
Celebrities among those who lost homes as devastating Los Angeles fires | AP News
Their neighborhood is a hillside area along the coast dotted with celebrity residences and memorialized by the Beach Boys in their 1960s hit “Surfin’ USA.” In the frantic haste to get to safety, roadways became impassable when scores of people abandoned their vehicles and fled on foot, some toting suitcases.
Wildfires that are burning in and around Los Angeles have burned the homes of several celebrities, including Billy Crystal, Mandy Moore and Paris Hilton.
California firefighters are battling wind-whipped fires tearing across the area, destroying homes, clogging roadways as tens of thousands fled and straining resources as the fires burned uncontained Wednesday.
Crystal and his wife, Janice, released a statement Wednesday saying their home of 45 years in the Pacific Palisades neighborhood was lost.
“Janice and I lived in our home since 1979. We raised our children and grandchildren here. Every inch of our house was filled with love. Beautiful memories that can’t be taken away. We are heartbroken of course but with the love of our children and friends we will get through this,” the Crystals wrote in the statement.
The latest on the multiple wildfires burning in Southern California:
Evacuation zones: Some 130,000 people are under evacuation orders. Wildfires that ripped through the Pacific Palisades neighborhood of Los Angeles forced many Hollywood stars, including Mark Hamill, Mandy Moore and James Woods, to evacuate their homes.
Climate/Change/Sustainability/ESG
Verisk submits wildfire model under new CA regulations | Insurance Business America
Verisk has submitted its wildfire catastrophe model for review under California’s new regulatory framework, which allows insurers to use catastrophe models in rate setting.
The company filed its application with Insurance Commissioner Ricardo Lara, requesting the initiation of a Pre-Application Required Information Determination (PRID) procedure for the Verisk Wildfire Model for the United States.
The model leverages data on wildfire hazards, vulnerability, and recent trends affecting wildfire risk in the Western United States, according to Verisk's filing with the California Department of Insurance (CDI).
“This model is a key part of Commissioner Lara’s comprehensive Sustainable Insurance Strategy,” Verisk said in a report from AM Best. The company noted that the model would enable insurers to better assess risk and accurately price insurance for homeowners and businesses in wildfire-prone areas.
The California Department of Forestry and Fire Protection reported that more than 1 million acres were burned across over 8,000 wildfires last year. In response, the state has implemented regulations to help stabilize its insurance market and ensure adequate coverage in high-risk areas.
Rob Newbold, president of Verisk Extreme Event Solutions, described the review as a significant step for California’s insurance market.
People
Lloyd’s of London CEO to step down for new role at Aon
John Neal will depart Lloyd's after more than six years on the job.
Lloyd’s of London CEO John Neal is stepping down after more than six years in the role, the world’s largest insurance marketplace announced on Wed., Jan. 8.
While Neal’s departure date was not disclosed, Lloyd’s confirmed Neal would be joining Aon as its Global CEO of Reinsurance and Global Chairman of Climate Solutions sometime in 2025.
“I will be forever grateful to my colleagues and many others across the Lloyd’s market for the opportunity to put in place a framework that has delivered strong and sustainable financial performance and positions Lloyd’s for future success,” said Neal in a release. “At Aon, I’m looking forward to supporting colleagues as they look to serve clients’ reinsurance needs and deliver smart insurance solutions that help address some of the world’s most pressing challenges, especially with regard to the climate transition.”
Neal’s tenure at Lloyd’s was marked with a reset in the strategic direction to deliver digital, operational and cultural change for the long-term future of the market, sustainable growth and record profits.
Everest Group Announces Leadership Transition
Everest Group, Ltd., a global underwriting leader providing best-in-class property, casualty and specialty insurance and reinsurance solutions, today announced that Jim Williamson, Executive Vice President and Group Chief Operating Officer, has been named Acting CEO, and accordingly has joined Everest’s Board of Directors, both with immediate effect.
Juan C. Andrade, who has served as President and CEO since 2020, has stepped down from his role to pursue a new position as CEO of a prominent financial services firm.
“The Board of Directors has great confidence in Jim and is pleased to have appointed him to take the helm at Everest,” said Chairman of the Board Joseph Taranto. “His appointment is consistent with the Board’s succession planning process, and we believe that his deep experience spanning insurance and reinsurance sectors, functional areas and geography will deliver value for stakeholders and position Everest well for the future.
Bold Penguin names new CEO
Bold Penguin , a commercial insurance distribution platform, has appointed Peter Settel as its new Chief Executive Officer and President. With over 25 years of experience in property and casualty markets, Settel brings expertise in technology and strategy to drive market growth and innovation.
Bold Penguin’s platform, which includes the Terminal, Exchange, Storefront, and Analytics, supports stakeholders in the commercial insurance industry. Under Settel’s leadership, the company plans to strengthen existing relationships and explore new strategic partnerships.
Settel succeeds founder and outgoing CEO Ilya Bodner. Both Bodner and co-founder Ben Clarke, previously Chief Data Officer, will remain involved as strategic advisors.
Before joining Bold Penguin, Settel served as Chief Strategy and Technology Officer at American Family Insurance and played a role in transforming its capabilities. Earlier in his career, he was EVP and CIO at Homesite Insurance and co-founder of MediaLink Interactive.