State of the Insurance Market Report
2025 Initial Outlook and 2024 Wrap-Up
Risk Management
Climate change and extreme weather events remain top concerns for organizations and risk management professionals. Additionally, rising claim costs and systemic risks are significant issues that are top-of-mind and frequently highlighted by clients.
Climate Change and Extreme Weather Events
According to a recent study conducted by a large global reinsurer, natural catastrophes caused approximately $62B in insured losses in the first half of 2024, which is roughly 70% higher than the ten-year average. The major losses during this period were primarily driven by wildfires, floods, droughts, and Hurricane Beryl.
The economic impact of Hurricane Helene is not yet fully understood. We have seen destruction across multiple states, loss of life, and damage to infrastructure, property and business interruption. From the lens of insurance coverage and the impact to rates, determining the level of wind and water damage will be a key consideration for all those impacted, and the outcome, a driver of longer-term insurance rates. Bottom line, understanding and mitigating risk is critical for all businesses and proactively doing CAT modeling and property valuations is strongly recommended.
Increased Claims Costs
Higher-than-average claim costs continue to plague the insurance industry, affecting many organizations and nearly every line of coverage. Over the past few years, the average cost of claims has outpaced inflation, driven by supply chain disruptions, labor shortages, and material shortages. These delays have also significantly increased recovery times and business interruption losses. Other factors that contribute to rising claim costs include an aging workforce, increased litigation expenses due to social inflation, and run-away verdicts.
Systemic Risks
Another top concern for many of our clients is systemic risks — the potential for a single event to trigger a breakdown of an entire system, as we recently saw with the CrowdStrike Outage.
However, systemic risks can also involve broader events that lead to severe instability across an entire industry or economy.
Risk analysis and risk management are increasingly important to identify new methods for dealing with these risks effectively and efficiently.
Analyze and define your supply chain strategy. This may include keeping an adequate supply of spare parts and critical materials on hand.
Augment and accelerate loss prevention and loss mitigation strategies.
Use data analytics to identify vulnerable areas of the business and target protections.
Conduct risk assessments, operational audits, and ongoing training for your employees.
Incorporate resilience measures and other safeguards beyond those required by law or building codes.
Filing large, complex claims with carriers can be an overwhelming experience. We build resilience into your programs to help you recover rapidly after the unexpected occurs.
Download the Report
Our industry and product line specialists have collaborated to provide an update on current trends and market conditions. We invite you to explore their insights by downloading our latest State of the Insurance Market Report.