As 2024 draws to a close, it’s a good time to reflect on what the insurance industry achieved, what surprised us and how longer-term trends progressed.
From an industry results perspective, 2024 was a strong year. Buoyed by rate increases and continued (but diminishing) interest rates, carriers saw global insurance premiums grow by 4.6% in 2024, outperforming the 1.6% average of the past five years. Growth was driven by life insurance, with a decade-high 5% in 2024, while non-life growth was 4.3%, up from 3.1% CAGR of the last five years, due to the impact of the hard market. Life and non-life premiums accounted for 43% and 57% of total premiums in 2024. Steady economic growth and resilient labor markets continued to support the industry.
Qualitatively underlying these financial and operating results, we observed the following:
- AI drove material economic impact.
As reported by C-suite clients surveyed by Accenture globally, 87% of carriers (91% P&C; 82% L&A) achieved material financial benefits from gen AI usage. The industry has monetized robust, production solutions for enhanced Underwriting and Claims settlement for segments of the book. But, in a world of ever-rising expectations, the demand is now for impact “at scale” (i.e., moving from impactful individual use cases to impact across functional or value chain domains).
- Insurers met increasing demands on core functions with alternative talent strategies.
The underwriting function, which has long struggled with an aging workforce and outdated processes, got some relief in 2024 with AI and gen AI allowing senior underwriters to use their expertise in higher value areas such as business development and negotiation. A prime example is QBE, which is scaling industry-leading AI-powered underwriting solutions replicated across multiple lines of business. With AI, QBE can now process (i.e., ingest and extract insights from) 100% of submissions received from brokers and drive higher quote-to-bind rates with Underwriters focused on the highest value submissions.
Insurers also executed strategies to address increasing regulatory and capital requirements without increasing headcount by drawing on talent pools outside their organizations and in lower-cost locations. For example, many insurers and reinsurers sourced high-end actuarial, loss/CAT modeling and capital allocation resources from India where there is a growing actuarial talent pool.
- Optimizing operating models and segment growth was a recurring theme.
Cost reduction efforts in recent years had many heads of divisions and business units looking for greater autonomy and control of costs. In 2024, we saw insurers across lines of business and geographies thinning out the corporate center and emphasizing optimization or strategic realignment of their operating models and greater leadership focus on customer and product segments.
- Shifts in the risk landscape drove cross-sector growth strategies and capital reallocation.
Recognizing the growth potential in the health sector, insurers are building health businesses and exploring opportunities in emerging health risks. For example, Aviva Insurance Ireland is backing Level Health, an insurance business that offers customers lower costs on a variety of plans. Meanwhile, FWD Group is addressing emerging health risks among gamers in the Philippines, offering insurance solutions for gaming-related risks, such as vision problems, insomnia and migraines. Care navigation, remote mental health and telehealth services also increased with the combined digital health market growing to $172 billion, a 16% increase.
Retirement took center stage in 2024. Concerns about longevity risk and retirement readiness fueled attention and the need for change. As investors took advantage of higher interest rates and questioned whether defined contribution and public programs can provide adequate retirement income, annuities set sales records for a fourth consecutive year. In China, workers covered by the public system for basic pension insurance were allowed to voluntarily open private pension accounts, alleviating some of the systemic stress from a rapidly aging population. And more Millennials, poised to benefit from the Great Wealth Transfer and lacking interest in traditional career paths, gravitated toward the Financial Independence, Retire Early (FIRE) movement.
- Prevention mindsets offer service revenues and reduced losses.
Risk mitigation as table stakes now has more insurers and their customers turning to prevention of injury and illness. In the U.S., 90% of new vehicles offer standard automatic braking. And in 2024, the global advanced driver assistance systems market increased 17% (Statista). Finally, genetic cancer screening and MRI scans, like those offered at a discount to John Hancock customers through their partnership with Prenuvo, enable early detection and better mitigation of health, disability and mortality risk.
Looking ahead to 2025
As we move into the holidays, there is reason for optimism. The insurance industry continues to operate from a position of strength.
