KBW predicts a mixed outlook for the Property & Casualty (P&C) insurance sector in 2025. While pricing growth is expected to slow overall, with declines in commercial property and reinsurance rates, commercial casualty lines should see modest acceleration.
Personal auto insurance rates will likely decelerate rapidly, while homeowners insurance rates increases are expected to decelerate more slowly.
Additionally, KBW analysts stated that Gross Written Premium (GDP) growth is projected to drive increases in exposure units, premium volumes , and broker revenues, although this would be more slowly than in recent years.
Improvement is expected to take place despite potential headwinds in their employment consulting businesses.
KBW anticipates continued strength in catastrophe reinsurance profitability, driven by stable terms and conditions, although tempered by overall rate decreases.
Primary commercial and personal property insurers should see improved core profitability, assuming normal weather, due to lower reinsurance costs, analysts stated.
Moreover, investment income is poised for modest growth as new money yields continue to exceed blended book yields, this assuming normalized alternative return.
The favourable underwriting environment suggests a focus on retaining earnings and limited M&A activity, although insurance brokers should steadily pursue acquisitions, KBW concluded.
