The insurance market is expected to remain a mixed bag in 2025, with some sectors experiencing transformation and growth, while others remain challenged.
According to Amwins’ annual State of the Market report released Thursday, the excess a surplus (E&S) insurance sector experienced “notable” growth over the past six years, and the use of advanced technologies continue to grow. Meanwhile, the transportation and the cybersecurity sectors continue to face significant challengers. The healthcare sector is seeing signs of recovery, while the energy sector remains stable.
The professional lines market is entering a period of transformation as carriers adapt to new opportunities and challenges. As growth and innovation stay top of mind, we’re seeing notable trends emerge
Markets are also increasing their investments in advanced technologies, such as artificial intelligence and application programming interfaces, in order to streamline online portals and improve user experiences.
The report said that there is a notable growth trend in adapting enhanced offerings with additional security and preventative options, with some markets even tapping into independent revenue streams from these services. Insurers are seeing opportunities in niche markets, including telemedicine and real estate development.
The E&S sector has experienced notable growth over the past six years, the report said. Key drivers for this growth include the continued innovation in product development, expansion into new and underserved markets, leveraging technology and data analytics and continuous adaptation to changing regulatory landscapes.
“The future of the E&S insurance market is positive, with several factors likely to sustain its growth trajectory,” the report said. “With a strong foundation and a forward-looking approach, the market is well-positioned to continue its upward trajectory.”
On the property front, the market is expected to soften despite two major typhoon events that devastated the US this year, as new capacity continued to enter the market in 2024.
Hurricane Helene, which was an inland flooding event, has an initial loss estimate of $6 billion to $12 billion. Hurricane Milton, a wind event that is expected to be among the costliest hurricanes in US history, has an initial loss estimate of $15 billion to $30 billion.
While there is a possibility that these hurricanes will affect the property market to some extent next year, that level of impact is still uncertain, the report said.
“For now, we view the 2024 hurricane season as an earnings event, rather than a balance sheet event, for the vast majority of carriers,” the report said.
Both the energy and healthcare sectors begin to see signs of recovery. The healthcare industry, which has seen a recovery from recent years, should focus on operational efficiency and partner with well-capitalized entities to mitigate risks.
Despite financials improving significantly, healthcare organizations are “not yet out of the woods,” the report said. Still, there is an increased scrutiny with private equity ownership in healthcare facilities, with labor shortages and rising supply costs remaining as ongoing concerns.
In the energy sector, catastrophic events and ongoing technological advancements that complicate coverage have slowed progress. The financial burden of rising costs is still a concern and the market’s response to these conditions remains uncertain, the report said.
The transportation insurance market continues to face significant challenges amid economic pressures and increasing loss severity. The overall environment also remains tough for many insured, particularly those within the trucking industry, the report said.
However, capacity in this sector remains relatively strong, the report said, but social inflation and the rising costs associated with litigation continue to exacerbate loss trends.
As insurers increasingly factor technological investments when evaluating risk, those that invest in advanced risk management practices and technologies are more likely to secure favorable terms.
The cyber insurance market is also facing increased competition and heightened risk dynamics. Capacity in this sector continues to grow, but new entrants are faced with aggressive pricing strategies from competitors.
“Emerging players and changing market dynamics are influencing capacity trends,” the report said. “This mix of new entrants and ample capacity suggests that market conditions are likely to persist into the foreseeable future.”
Coming into 2025, capturing the nuances of a mixed market remains a challenge, Amwins said.
“Some industries are seeing a competitive rate environment and better underwriting conditions, while others are contending with the exact opposite,” the report said.
