Global insurers delivered strong premium growth and improved profitability in 2025, but the industry's recent gains are largely cyclical and mask unresolved challenges that it confronts, according to new research released by Bain & Company.
Bain’s Global Insurance Report, 'Strong Momentum in Insurance, but Structural Challenges Remain' found that global premiums reached an estimated $7.1tn in 2025, up from $6.7tn in 2024, and doubling in 15 years from $3.6tn in 2010, with premium growth expected to exceed the prior decade’s rate in every region except South America – and across property and casualty, life, and health insurance.
Profitability also improved, particularly in P&C insurance, helped by rate increases and a relatively benign year for catastrophe losses. Yet, despite these favourable conditions, Bain cautions that the industry’s strong 2025 is not a reliable indicator of its long-term health. Structural challenges around affordability and access, limited economic payoffs from technology investment, and competition across the insurance value chain remain unresolved and could limit future growth, Bain’s analysis found.
Insurance penetration remains low or under pressure in key markets, affordability is strained, and investors continue to question whether insurers can generate durable earnings growth beyond the current cycle, Bain observed. Underlying tension between near-term strength and long-term uncertainty is a key reason that the insurance industry’s next phase will depend on lowering the cost of risk.
“Insurers should enjoy today’s momentum – but they should not mistake it for structural advantage,” Bain & Company’s Global Financial Services Practice Partner and lead author of the report Andrew Schwedel said. “The industry’s next phase of value creation will depend on whether insurers can lower the cost of risk, by preventing losses, expanding access to advice and coverage, improving productivity with AI, and using capital more efficiently. Those that do will be better positioned to improve affordability, close protection gaps, and create more durable value.”
Structural challenges remain unresolved
The industry’s strong 2025 performance does not resolve the structural problems, said the report. In P&C, coverage has become less affordable for many households after a multiyear hard market that drove up rates in home and auto. In life insurance, access has weakened as product complexity and the up-market migration of advisers have widened the advice gap, even as consumers’ self-reported need for protection has increased.
Persistent protection gaps across healthcare, mortality, natural disasters, and cybersecurity meanwhile underscore the opportunity for insurers to expand coverage by making products more affordable, accessible and valuable, the report notes.
Digital investment has yet to deliver cost efficiency
Insurers are accelerating investments in data, technology, and AI, but these investments have not yet delivered meaningful operating leverage at the industry level, Bain also found. Direct written premiums doubled over the past decade, while expense ratios declined by only one percentage point. A nearly 50% decline in hiring among the 30 largest insurers in North America and Europe since 2022 may be an early indicator of future cost efficiency, but Bain cautioned that productivity gains will require more than headcount reduction.
At the same time, insurance value chains are becoming more fragmented as balance sheets, distribution, operations, servicing, technology, and capital become increasingly separable. Reinsurance continues to outgrow the broader industry, with 28% premium growth from 2019 through 2024, including sidecars and insurance-linked securities, compared with 24% for the industry overall. As the insurance value chain becomes more fragmented, traditional integrated carriers can no longer assume they will retain the industry's most attractive profit pools, the report said.
Lowering the cost of risk is the new basis of competition
Lowering the cost of risk will be critical for insurers seeking to increase relevance and expand the market, the report advised. Its identified four levers for doing so: claims, distribution, operating expenses, and capital.
In claims, prevention technologies such as automatic emergency braking, residential sprinklers, smart home protection, storm-hardened construction, and wearable devices that monitor health could reduce claims costs by 10% to 20%, according to the report's estimates. In distribution, AI-enabled adviser tools and personalized digital advice could help address adviser scarcity and expand access to complex products. In operations, agentic AI could transform administrative work and claims adjustment, while in capital, greater standardisation could attract new sources of investment and expand insurance capacity.
Bain’s report also examined how new competitive models may emerge across distribution and product, operations and servicing, and balance sheet and asset management.