With the end of the year fast approaching, we revisited the key findings from The Carrier Perspective: 2024 Claims Insights, our in-depth report following our global Claims Insights Survey, in which 150 businesses from across the insurance sector shared their thoughts on the state of the industry.
This year, we are once again inviting insurers to share their valuable expertise with their peers. The next edition of The Carrier Perspective will be another must-read for industry professionals. Before then, however, we have decided to share our perspective on a few key takeaways from the 2024 survey and reflect on how they have developed over the past 12 months.
From social inflation and legacy claims to the battle for talent, it has certainly been another big year for carriers, and 2025 is shaping up to be no less fraught with challenges or flush with opportunities.
Navigating a Hard Market
When asked to nominate the most significant challenge they faced in 2024, carriers highlighted the economic pressures bearing down on them. More than a quarter (29%) were concerned about the industry’s struggle to balance competitive pricing with sustainable profit margins. Market competition (22%) was a secondary concern, with the hard market reality of premium increases and restricted coverage terms taking a toll.
Credit rating agency, AM Best, has since forecasted that the current hard reinsurance market will continue into 2025. Despite global reinsurance capital reaching a record high of more than $620 billion this year, it states that pricing and conditions are unlikely to soften soon and warns carriers “not to rest on their laurels.” As reported by Insurance Business: “The industry continues to navigate the challenges posed by increased catastrophe activity and changing financial conditions.”
However, when we attended the Wholesale & Specialty Insurance Association (WSIA) Annual Marketplace recently, Jon Stambaugh, SVP — Carrier Practice Sales, noted that it was encouraging to report that “overall, the mood was very upbeat and focused on a positive future,” which we attributed largely to promising growth for surplus lines.
Meanwhile, in the same article, Tim Over, SVP — Gallagher Bassett (GB) Specialty, highlighted the rising challenges in areas such as medical malpractice and commercial auto/transportation, demonstrating how unpredictable the market remains for many carriers and claims sectors.
Another observation made by Amy Cooper, VP — Carrier Practice Sales, over the course of the year was that, when it came to market fluctuations, diversification strategies were a key consideration for mutuals and mid-markets looking to grow. This exemplified the resilience and ingenuity that has coursed through the industry in response to the economic uncertainty of 2024.
While the difficulty of navigating a hard market was a common challenge cited earlier in the year, it was also a common motivator for carriers, driving innovation and opening doors to new areas of growth. This is a promising sign, given that there does not appear to be any immediate relief in sight as we head into next year.
Social Inflation
The impact of social inflation was front and center in our 2024 survey, with 69% of North American carriers stating they had increased premiums to navigate pricing challenges. According to 37% of respondents, the level of coverage sought by insureds in their policies had also increased as a direct result of social inflation. The ramifications of social inflation are significant and far-reaching.
A year on, the social inflation challenge remains, with industry experts stating there is “no indication that (it) is slowing down.” Research from the Swiss Re Institute found that general liability claims in the U.S. have risen by an annual average of 16% over the past five to six years, and the Private Risk Management Association (PRMA) recently urged carriers to inform clients about how they can protect themselves against the trend.
For carriers, this translates into increased claims costs, a greater likelihood of catastrophic claims, and a growing challenge in predicting and underwriting risks accurately. Additionally, the rise in jury awards can put pressure on policy limits, leading to higher insurance costs and negatively impacting stock prices for publicly traded carriers.
Social inflation has certainly continued to be a topic of great prominence at events attended by GB’s Carrier Practice Team throughout the year, as noted in the key takeaways from Amy O’Brien, VP — Carrier Practice Sales, during her attendance at the Vermont Captive Insurance Association’s (VCIA) annual conference, as well as being a key subject in a number of sessions at RISKWORLD in May. This did not come as a surprise to our team, as we extensively covered “Six Strategies for Managing Social Inflation” in October of last year, an article that the University of Southern California found to be on point and also published.
What does the future hold for 2025? It has been reported that in 2023, the number of socially inflated verdicts of $10 million or more skyrocketed to 58, and 2024 is on pace to equal or surpass that figure. By understanding the dynamics, staying informed, and collaborating with industry experts like GB, you can proactively manage and mitigate the impact of social inflation, ensuring the long-term stability and profitability of your insurance operations.
Finding and Retaining Top Talent
There was also no hiding from the talent crunch impacting the insurance industry. A tight labor market was driving wage inflation, while we reported that more than 400,000 positions would be unfilled within the next five years due to an aging workforce and difficulties attracting younger talent to replace them. The result? More than 85% of North American carriers were paying higher wages to retain employees, and 56% were redesigning benefits, including flexible work.
Since then, Insurance Journal has noted: “The battle for great insurance talent has advanced into a war.” In recent months, the U.S. Bureau of Labor Statistics reported that the industry is experiencing an unemployment rate nearly half the national average.
Talent challenges were a recurring theme at almost every event we attended this year and featured in our thought leadership on the challenges facing carriers, from MGAs and PAs to mutuals and mid-market carriers.
At GB, talent attraction, engagement, and retention have been primary focuses for us over a long period of time, and our investment in our people is one of our dominant priorities heading into 2025, as Joe Berrios, Managing Director — Carrier Practice, reinforced in his article outlining our strategic approach to people, talent, and retaining a diverse workforce.
And in exchange for our investment, we are proud to say that our company and our people continue to reward us with honors and achievements that make them, and GB, stand out in the industry. To name just a few:
- Caryn Siebert, VP — National Director, Carrier Engagement, was awarded the 2024 Lifetime Achievement Award by CLM at their annual conference in April.
- Amy O’Brien, VP — Carrier Practice Sales, was recognized as a member of the Captive Power 50 for the fourth year in a row and, more recently, named one of Captive International’s Influential Women in Captive Insurance for 2024.
- Amy Cooper was recognized by Reuters as an industry Emerging Leader, and Jennifer Cogbill, SVP — GBCARE Client Services, was recently named an honoree on the 2024 Business Insurance Women to Watch list.
- Additionally, GB was recognized by Captive Review in August for NextGen Initiative of the Year for our IN2GB rotational internship program and named Claims Specialist of the Year for the 7th year in a row. PC360 also named GB a Luminary for Workplace Innovation & Culture for Include@GB, our initiative dedicated to making GB an inclusive, equitable, and diverse place to work.
So, what does the next chapter of the battle for talent have in store? There is no question that the challenges facing carriers at the start of 2024 have persisted and, in some cases, escalated. Our prediction is that carriers with a strong strategy for supporting and championing the growth of their people, and in partnership with a TPA such as GB, will continue to prevail in the face of talent headwinds, as we have witnessed firsthand this year. Suzanne McCarthy, SVP — Carrier Practice Client Services, advises that partner sourcing can enable carriers to have the best of both worlds while still controlling and achieving superior claim outcomes.
Legacy Claims
When it comes to widespread industry challenges, legacy claims sit near the top of the list. Our 2024 survey found that 62% of carriers believe they pose challenges to business profitability, financial health, and operational efficiency. Additionally, 37% of North American respondents were considering engaging claims and risk management providers to accelerate the resolution of legacy claims. In a bid to address this dilemma, the past year has seen an increasing number of carriers explore the power of generative AI, with a KPMG survey finding that 84% of firms believe investing in the technology will give them a competitive edge by speeding up the claims process.
We have experienced firsthand the benefits of technology in achieving just that, as Chris Hampshire, VP — Carrier Practice Sales, discussed in a recent article. Throughout 2024, we have also continued to develop and evolve our award-winning RMIS system, Luminos, empowering us to assist clients with large legacy claims books. Additionally, we unveiled our Gen AI roadmap, which is already paving the way for an even brighter claims management future for our legacy clients in 2025.
The most effective strategy for successfully managing complex legacy claims is partnering with experts who have the specialized knowledge and decision-support tools necessary to minimize the burden of ongoing challenges associated with legacy claims and large loss portfolios, as illustrated in our most recent case study.
The bottom line is that many of the trends and predictions we included in our 2024 Claims Insights Survey have not disappeared; they have continued to evolve. With these evolutions come new challenges and opportunities, and it’s these developments we look forward to hearing about from you in The Carrier Perspective: 2025 Claims Insights Survey, as we continue providing solutions that help achieve superior outcomes. Be it one of the above topics, the economy, or technology, The Carrier Perspective: 2025 Claims Insights Survey is your chance to have your say and contribute positively to the industry.
We thank you in advance for your participation and welcome your perspectives.
