Commercial Insurance Issues To Watch in 2025
By: Joe Toppe
Here are the five commercial insurance issues to watch in 2025 as selected by Charlie Sidoti, executive director of InnSure.
Reputation Risk
Large and growing protection gaps, price increases and less concessionary policy terms and conditions combined with a populous mood of the public make the institution of insurance a target for the ire from people who see insurance as irrelevant to their challenges. This will especially be true of small and mid-sized commercial risks who do not have the sophistication or size to negotiate with insurance markets.
Engineering Expertise/R&D
The public, especially sophisticated commercial risk managers, expect carriers to understand and be able to consult on a broad array of risk reduction tactics across an array of hazards. They also expect implementation of risk reducing measures to be reflected in insurance pricing even if measures are innovative and not yet completely proven.
Cascading Losses
Commercial insurers can expect to see cascading losses due to supply chain challenges, and from personal lines losses that impact the ability of workforces to show up and the communities in which commercial accounts operate.
Regulatory Activity (State and Federal)
As governments consider how to deal with large protection gaps, insolvent fair plans, and an angry electorate, the pressure to make communities more resilient to catastrophes will inevitably spill over to how they regulate carriers who may be viewed as they villain in this story.
New Demand Driven Distribution Models
Given all the above pressures, commercial buyers and public sector officials will be exploring how to leverage new ways to purchase insurance. Group purchase and embedded catastrophe insurance will be explored by buyers as a way to impact affordability and accessibility of insurance solutions. As commercial consumers become more aware and engaged in insurance purchases, demand driven innovations will accelerate disruption of distribution models.
The commercial insurance market is predicted to reach $933.91 billion in 2024, according to the latest data from Market Research Future.
Market drivers include increasing regulatory compliance requirements, growing complexity of business operations and rising frequency and severity of natural catastrophes, the report showed, with machine learning and artificial intelligence now changing how risks are evaluated and underwritten, leading to correct prices and quicker claims settlement.
The use of innovations like telematics in commercial auto insurance is revolutionizing risk management while personalizing coverages for carriers and their customers. In 2024, 82% of commercial auto insurers used telematics in their organizations after just 65% utilized the technology in 2023. Also in 2024, 60% of commercial insurers formed dedicated, multi-disciplinary telematics teams, with Loss Control being the most represented area.
Meanwhile, an increase in claims is predicted for commercial lines in workers’ compensation as the average age of U.S. workers rise. Roughly one in four employees will be 55 or older by 2033, according to the Bureau of Labor and Statistics (BLS).
Over the next 20 years, the BLS predicts a 117% spike in both the 65 and older and 75 and older age groups.
“As the average age of workers increases, there is a higher incidence of chronic health conditions and comorbidities, along with an increased likelihood of workplace injuries and longer recovery times,” McGowan Program Administrators said in a December 2024 report. “Workers’ compensation programs must implement tailored safety programs and ergonomic solutions, focusing on preventive care and health maintenance. These measures are essential to support older workers in maintaining their health and productivity, ensuring a safer and more efficient workplace.”
At the same time, technology will continue shaping workers’ compensation as innovations like AI and telemedicine impact the customer experience from underwriting and claims processes, to offering immediate access to medical professionals for injured workers.
Article Link: Commercial Insurance Issues To Watch in 2025
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