Insurers cannot bank on the current cycle: Bain & Co.

Loss-prevention technologies could reduce claims by 10% to 20%.

Investors remain uncertain about insurers' ability to deliver sustainable earnings growth beyond the current cycle, particularly in the future earnings growth of Asia-Pacific life insurers and several other insurance segments.

Andrew Schwedel, partner in Bain & Company's global Financial Services practice and lead, said in the report “Strong Momentum in Insurance, but Structural Challenges Remain” that insurers should not assume current market conditions provide a lasting competitive advantage. 

He said future growth will depend on reducing the cost of risk through loss prevention, broader access to insurance advice and coverage, improved productivity using artificial intelligence, and more efficient use of capital.

Bain said structural issues remain unresolved across both property and casualty (P&C) and life insurance. In P&C, higher home and motor insurance premiums following several years of rate increases have reduced affordability for many households. 

In life insurance, more complex products and advisers focusing on wealthier clients have widened the advice gap despite growing consumer demand for protection.

The report also pointed to persistent protection gaps in healthcare, mortality, natural disasters and cybersecurity, which it said present opportunities for insurers to expand coverage by offering products that are more affordable and accessible.

Although insurers continue to invest heavily in data, technology and AI, Bain found these investments have yet to produce significant cost savings. 

Over the past decade, direct written premiums doubled, but industry expense ratios fell by only one percentage point. 

The report noted that hiring amongst the 30 largest insurers in North America and Europe has fallen by nearly 50% since 2022, but said lasting productivity gains will require more than workforce reductions.

Bain also said the insurance value chain is becoming more fragmented as underwriting, distribution, operations, technology and capital become increasingly separated. 

Reinsurance outpaced the wider insurance market, recording premium growth of 28% between 2019 and 2024, including sidecars and insurance-linked securities, compared with 24% growth for the industry overall. 

The report said this trend means traditional insurers cannot assume they will continue to capture the sector's most profitable business.

Global insurance premiums rose to an estimated $7.1t in 2025 from $6.7t in 2024, as insurers benefited from strong premium growth and improved profitability. 

However, the industry's recent performance is largely cyclical and does not address long-term structural challenges, according to Bain & Company's latest Global Insurance Report.

The report said global premiums have doubled from $3.6t in 2010, with premium growth expected to outpace the previous decade in every region except South America across P&C, life and health insurance.

Profitability improved last year, particularly in the P&C segment, supported by higher premium rates and relatively low catastrophe losses. 

Despite this, Bain said the industry's strong performance in 2025 should not be seen as a sign of long-term strength.

The consultancy said insurers continue to face pressure from affordability issues, low insurance penetration in several markets, limited returns from technology investments and increasing competition across the insurance value chain.

To improve long-term growth, Bain said insurers should focus on reducing the cost of risk across claims, distribution, operations and capital. 

It estimated that technologies such as automatic emergency braking, smart home protection systems, residential sprinklers, storm-resistant construction and wearable health devices could reduce claims costs by 10% to 20%. 

It also said AI-powered advisory tools could improve access to insurance products, whilst agentic AI could streamline administration and claims processing, and greater capital standardisation could attract new investment and increase insurance capacity.