As 2024 draws to a close, it’s a good time to reflect on what the insurance industry has achieved, what has surprised us and how it’s going long term.
From an industry performance perspective, 2024 was a strong year. Encouraged by rising rates and persistent (but declining) interest rates, carriers are seeing world insurance premiums up 4.6% in 2024, surpassing the 1.6% average of the previous five years. Growth was driven by life insurance, with a decade high of 5% in 2024, while non-life growth slowed to 4.3% as the impact of the tough market faded. Life and non-life premiums account for 43% and 57% of total premiums in 2024. Steady economic growth and strong labor markets continued to support the industry.
Based on these financial and operational results, we noted the following:
- AI has fueled material economic impact.
As reported by C-suite customers surveyed by Accenture worldwide, 87% of carriers (91% P&C; 82% L&A) have realized tangible financial benefits from the use of gen AI. The industry has capitalized on robust, productive solutions for advanced payments in the Underwriting and Claims book segments. But, in a world of ever-increasing expectations, the need is now for impact “at scale” (ie, from impactful individual use cases to impact across functional domains or value chains).
- Insurers have met the growing demands of key operations through alternative talent strategies.
The underwriting profession, which has long struggled with an aging workforce and outdated processes, has found relief in 2024 with AI and gen AI allowing top underwriters to use their expertise in high-value areas such as business development and negotiation. A prime example is QBE, which leverages industry-leading AI underwriting solutions that are replicated across multiple lines of business. With AI, QBE can now process (ie, import and export information) 100% of referrals received from brokers and drive higher quote rates to bind with Underwriters focused on higher value referrals.
Insurers are also developing strategies to address growing regulatory and financial requirements without expanding their workforce by drawing talent pools outside of their organizations and into low-cost areas. For example, many insurers and reinsurers have sourced actuarial, loss/CAT and capital allocation services from India where a growing actuarial talent pool.
- Developing operating models and growing the segment was an ongoing theme.
Cost-cutting efforts in recent years had many division heads and business units seeking greater autonomy and cost control. By 2024, we saw insurers across lines of business and geographies shrinking the business center and emphasizing optimization or strategic restructuring of their working models and multi-leadership focus customer and product segments.
- The changing risk environment has encouraged diversification strategies and reallocation of funds.
Recognizing the potential for growth in the health sector, insurers are building health businesses and exploring opportunities in emerging health risks. For example, Aviva Insurance Ireland supports Level Health, an insurance business that offers customers low costs on a variety of plans. Meanwhile, FWD Group addresses emerging health risks among gamers in the Philippines, providing insurance solutions for gaming-related risks, such as vision problems, insomnia and migraines. Care navigation, remote mental health services and telehealth services also increased with the combined digital health market growing to $172 billion, a 16% increase.
Retirement started in 2024. Concerns about longevity risk and retirement readiness focused attention and the need for change. As investors brace for higher interest rates and question whether defined contribution and public plans can provide enough money for retirement, annuities set sales records for the fourth year in a row. In China, employees under the government’s basic pension insurance system are allowed voluntarily open private pension accountswhich reduces some of the systemic stress from people who age quickly. And more Millennials, who are ready to benefit from the Transfer of Great Wealth and are not interested in traditional career paths, are drawn to understanding Financial Independence, Retire Early (FIRE) movement.
- Prevention minds provide service revenue and reduced losses.
Risk reduction as table stakes now has insurance companies and their customers turning to injury and illness prevention. In the US, 90% of new cars are offered standard automatic braking. And by 2024, the market for advanced driver assistance systems worldwide will increase by 17% (Statista). Finally, genetics cancer screenings and MRI scans, such as those offered at a discount to John Hancock customers through its partnership with Prenuvo, enable early detection and better reduce health, disability and death risk.
We look forward to 2025
As we head into the holidays, there is reason to be optimistic. The insurance industry continues to operate from a position of strength.
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