2024 was a volatile year for the U.S. insurance sector. Rising costs, wild storms, a stubbornly sluggish economy, a new chief occupant at 1600 Pennsylvania Ave., and big technological changes, such as artificial intelligence and machine learning, have all changed the game for insurance companies.
What are the major issues affecting the big consumer insurance channels in 2025? Here's what industry experts have to say.
How the President-Elect's Planned Policies May Affect Insurance
Unsurprisingly, the incoming administration's policies are highly likely to shake up the insurance landscape.
"In particular, there could be a heightened focus on new health and regulatory compliance," says Danny Ray, a licensed insurance agent in Jacksonville, Fla.
The new administration should also have a policy impact on the auto sector.
"For starters, the push toward electric vehicles (EVs) might lead to updated coverage frameworks as insurers navigate EV-specific risks and incentives," Ray says. "This regulatory environment will require insurers to be more agile than ever."
Home Insurance Dealing With Mother Nature
The home insurance channel has several burners going, although weather-related events might be the hottest.
"I'm concerned about the home insurance market especially when it comes to costly events impacted by climate change like flooding and wildfires," says Max Dugan-Knight, a climate scientist at Deep Sky, a carbon removal project developer. "Climate change has been accelerating faster than most climate scientists expected, and this has already had destabilizing impacts on the home insurance and reinsurance markets in climate change-vulnerable states like Florida."
Technological Disruption and Insurance
Digital disruptions – and opportunities – are also casting a big shadow over the consumer insurance sector these days. Artificial intelligence is at the front of that line.
"There's a lot going on," says Joel Pepera, director of product development at Arity, a data science technology firm in Washington, D.C. "For instance, AI-driven telematics reduces bias in auto insurance pricing for underserved or high-risk areas. AI-powered telematics reduces bias in how insurers evaluate driving risk by focusing on what truly matters—behavior behind the wheel."
Travel Insurance in the Public Policy Eye
2025 could look more like 2016 for the U.S. travel insurance sector.
"During President Trump's first term, his travel ban had lasting effects as it barred travelers from certain regions and raised concerns about shifting entry policies," says Joe Cronin, president of International Citizens Insurance in Boston, Mass.
If these or similar policies were to be reintroduced in 2025, the travel insurance industry might experience increased demand for "cancel for any reason" policies, catering to travelers wary of booking trips amid policy volatility, Cronin says. "There would be a higher demand for flexible coverage options."
Healthcare Insurance Getting More Expensive
Healthcare cost increases will be common in 2025.
"As a result of the high demand for health services, expenses related to healthcare are surging, and there is a high likelihood for insurance premiums to be raised," says David Milo, insurance strategy consultant and founder of Independent Lending in Orange County, Calif. "Pricing models will also be affected by government shifts in the healthcare system or reforms in government healthcare practice."
Life Insurance Moves
Life insurance premiums should be headed upward in 2025, albeit at a moderate pace.
According to Swiss Re Institute, life insurance premium forecasts should see 2.7% annual premium growth in 2025 and 2026. That is below the long-term trend of 3.7% as measured annually by Swiss Re from 2014 to 2023. The company reports that U.S. insurance consumers should expect smaller rate increases this year.
Auto Rate Increases on the Doorstep
Consumers can also expect auto insurance rates to rise, and by more than other consumer insurance channels.
"As an industry, insurers increased auto rates to return to profitability but as a result, policyholders took to shopping their policies to find rate relief," says Henry Kowall, director of product insurance at Arity. "Having to contend with lower customer retention, some carriers are spending again on advertising to try to win over these new shoppers and grow sales."
What Insurance Consumers Need to Do in 2025
There is no shortage of challenges facing U.S. insurance consumers heading into the new year. To stay ahead of the pack, insurance consumers should take the following actions:
Bundle coverage: Combine home, automobile and any other policy with one insurer to access discounted rates. "That should be the norm for 2025," Milo says.
Increase deductibles: An expanding selection of higher deductibles on home and automobile policies should reduce premium charges.
Monitor health insurance plans: Consumers should monitor new trends and developments within the medical space, which may require alternative options. "Consider healthcare plans that are dynamic and might be cost-effective," Milo adds.
Embrace technology: Take full advantage of telematics or AI-based apps that monitor driving lifestyle and health practices. Consumers can also receive personalized policy suggestions via AI.
Review coverage regularly: Regular review of coverage can cut unnecessary costs and ensure adequate insurance.
