Many insurance leaders have written about the opportunities and challenges insurers face to manage risk in a world of demographic ageing, urbanisation, changing mobility needs, extreme weather events, cyber-security and fraud, business interruption escalation, and much more (see further reading below)
Three-year , five-year and longer transformation plans to change business and operational models and replace underlying legacy technologies to become adaptive, customer-centric, and data-fluid gain traction.
In parallel, the dreaded quarterly reporting burdens hit the CEO and C-Suite, with the pressure to demonstrate growth and competitive success. P&C insurance is still largely driven by price rather than value and utility. Unforseen events can hit insurers following that path.
The UK is currently experiencing softening home and motor markets.
'Pearson Ham Group’s latest General Insurance Price Index, released this week (4 June 2025), which also showed the rate of decline is growing – in April, motor premiums fell by just 0.8% and home premiums by 0.4%.
The drop means that motor premiums have fallen 17% in the past year, with median prices now standing at £455.
Home premiums have seen a more modest fall, recording a 6% drop over the past year after May’s substantial decline.'
Insurance Times 6th June, 2025
It is not long since combined ratios at some major UK insurers sunk to unsustainable levels; one prominent CEO was summarily ejected being held responsible for the calamity. Chasing volume with low pricing combined with unexpected claims inflation were key reasons that these insurers were caught out in the open with their key ratio pants down.
Competitive pressures and price-aware consumers seeking better value are again worrying insurers. After raising premiums in 2024 and improving COI and LAE performance, some are again chasing volume with lower pricing.
Will more shocks hit the market and threaten those working on ultra-low margins? Will customer growth today lead to better financial performance tomorrow?
Will this focus on short-term results turn attention away from anticipating and planning strategies to meet the longer-term changes expected in customer behaviour, customer needs, and competitive threats?
The recent acquisition of Direct Line Group by Aviva, and esure by Ageas seeks to gain the advantages of growing customer bases, reducing costs significantly, optimising technology innovation, and transforming business models.
How will the other P&C insurers cope with reconciling short-term pressures with long-term success?
The lure of Generative AI and Agentic AI offers insurers a means to augment humans, free up time to reconcile short-term and long-term contradictory pressures, and come out on top. The trouble is that the speed of development is so fast and accelerating, whilst the benefits from competitors are converging as LLMs become commoditised and training data universally distributed.
Insurers that are still reliant on legacy technologies (most), and burdened with different technology stacks in different lines of business and geographies (most) will find it increasingly hard to escape the net closing around them without replatforming to adaptive core technologies that can manage all lines of business across different regions.
It takes visionary, brave, and effective leadership to navigate these stormy seas with an eye on today, tomorrow, and the next decades.
Further Reading
Motor and home insurance premium falls accelerated in May
The aging demographic pivot demands strategic P&C insurance transformation
Insurance Needs a New Business Model
Mary Meeker Bond Group 2025 AI Report
Ageas acquisition of esure rivals Aviva-Direct Line Group
AI, systems infrastructure, and Three Little Pigs
Stephen Kennedy, director at Pearson Ham Group, said: “While last month’s data hinted at a possible stabilisation in motor pricing, the renewed acceleration in May points to a continued softening of the market.” He continued: “Insurers appear to be adjusting rapidly to shifting claims dynamics and competitive pressure, which is now manifesting as more pronounced reductions across a broader range of customer segments. The coming months will reveal how much this cycle continues.”
unknownx500
