October 24, 2025

Sink or Swim: Insurers must adapt in this era of change, Deloitte finds

The insurance industry continues to rocket through perhaps the most dynamic era of change in its history, with technology, climate change, consolidation, and legal/regulatory demands creating relentless pressure.

Insurers that are responding will survive, and even thrive, Deloitte reports. Those that don’t will fall behind.

“The future of insurance is here, and carriers will need to decide how to most effectively transform business models, infrastructure, and talent to remain profitable,” Deloitte concluded in its 2026 Global Insurance Outlook.

Deloitte projects a “bifurcated industry” in which tech-forward carriers thrive while laggards struggle under cost and compliance pressures.

The firm conducts its global insurance outlook annually via conversations with industry executives from around the world. With insurers having to meet so many challenges it isn’t surprising that Deloitte is not projecting as much financial growth as in recent years.

“[W]e think the growth will be moderating,” explained Joe DeSantis, U.S. national insurance sector leader for Deloitte. “While there will still be growth in commercial auto and still be growth probably in the property lines as well … we won’t see it to the extent that we saw it in 2025.”

Climate change impacts

Property and casualty insurers face unrelenting impacts from increasingly poor weather events. From the devastating California wildfires to hurricanes in Florida, the high-intensity climate-fueled events are costing insurers billions. Premiums have skyrocketed and many P&C companies are pulling back on coverage.

Weather events are making it more expensive for primary firms to transfer their risk, Deloitte said. Tightening reinsurance terms and increased risk retention are driving up loss ratios, adding to a $183 billion global protection gap, the outlook found.

“We do believe that the severity of these catastrophes will be escalated going forward,” DeSantis said.

P&C insurers face additional pressures from more lawsuits funded by international investors, and broker consolidation that makes it harder to stay competitive. Yet, advanced technology (drones, satellite imagery and real-time monitoring) may help to minimize losses and improve risk awareness and management.

Life insurance growth slowing

Global life insurance growth is slowing as “U.S. policy and ongoing distribution consolidation are forcing carriers to rethink go-to-market strategies,” Deloitte concluded. Investing in private credit and strategic alliances with relevant partners such as homecare providers, TPAs, and tech companies may unlock new growth opportunities, the report said.

Two trends are expected to continue, DeSantis noted: booming sales of annuities, along with the strong interest from investment firms wanting a piece of life insurance companies.

Giant investment firms like Apollo Global Management and Brookfield continue to be drawn to life insurers for new sources of capital they can invest, Deloitte said.

Likewise, Lincoln Financial and Bain Capital formed a partnership to help the insurer accelerate its portfolio transformation and capital allocation priorities while leveraging the asset managers’ platform across asset classes. Guardian Life and Janus Henderson announced a strategic partnership in April of this year.

Other 2026 opportunities

Other key opportunities for insurers in 2026 include:

Opportunities for group insurance: As healthcare costs rise, participation levels in employer benefit programs are declining, Deloitte found. Group insurers may find growth by capitalizing on rising demand for customized employee benefits such as wellness products and daycare, and prioritizing seamless digital connectivity. A recent survey found that 40% of employers would switch insurers if products cannot be integrated with their online HR platform.

Real Business Impact of AI: Insurers are realizing real-world business impact of AI as they move from testing to integration such as AI-driven, real time fraud analytics, which could save P&C insurers up to $160 billion by 2032, Deloitte said. However, the same innovative technology is also widening risk of cyber-attacks that demand stronger data foundations, modern systems, and compliance to ensure cyber resiliency.

Advantages and uncertainties with new OBBBA (One Big Beautiful Bill Act): U.S. insurers benefit from a reduced corporate tax rate of 21% and other tax breaks under new tax rules, but details around international tax provisions that impact multinational insurers remain unclear, Deloitte said.