Insly: Insurance Industry Braces for AI & Climate Disruption

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Insly: Insurance Industry Braces for AI & Climate Disruption
Insly research finds insurers face regulatory pressure and hard market conditions as MGAs expand into new territories

The insurance market faces structural changes in 2025 as climate risks and artificial intelligence reshape traditional business models, according to research from insurance software provider Insly.

The London insurance market reached US$180bn in gross written premiums in 2023, double the level of a decade ago, while employment in the sector hit its highest point since 2013. 

These figures indicate significant growth, yet the sector faces mounting challenges from climate change, technology disruption and regulatory pressure.

Insly

Market Conditions and Environmental Risk

A hardening insurance market continues to push premiums higher across personal and commercial lines, driven by climate risks, natural disasters and claims inflation. 

This trend shows no sign of abating, with some customers struggling to secure coverage as insurers implement non-renewals.

“In 2025, one of the dominant trends will be the continuation of a hard insurance market, driven by the rising frequency and intensity of natural disasters,” says Jaime Arias, President at Dynamic Insurance Solutions. 

“These events will further push up reinsurance rates, making it difficult for carriers to offer coverage at previous price points.”

The impact of climate change has sparked increased demand for environmental insurance policies, particularly in regions vulnerable to extreme weather. 

In Florida, businesses are prioritising protection against flooding and storms to maintain operational continuity.

Niki Perez, Vice President at PTL Insurance in Miami, notes: “There will be a surge in demand for comprehensive environmental insurance policies, reflecting a broader societal shift toward sustainability. 

“Climate concerns have brought an imperative to safeguard assets against environmental risks.”

“In 2025, one of the dominant trends will be the continuation of a hard insurance market, driven by the rising frequency and intensity of natural disasters” 

Jaime Arias, President at Dynamic Insurance Solutions

Technology and Market Evolution

The pressure to modernise has pushed insurers toward artificial intelligence solutions, despite challenges around data privacy and algorithmic bias. 

Investment follows this trend, with one third of insurtech deals in Q2 2024 involving AI-focused firms.

Technology adoption has also blurred traditional market boundaries. Insurance brokers increasingly move into the Managing General Agent (MGA) space - firms that can underwrite on behalf of insurers. 

This shift is exemplified by The Clear Group's acquisition of MGA firm Accelerate Underwriting in 2024.

Lorenzo Frediani

“The insurance world has become blurred, and brokers are stepping into the space that used to be occupied only by insurers and MGAs,” says Lorenzo Frediani, Independent Insurance Consultant. 

“Now, it feels like only a matter of time before technology pushes large brokers to either go into the MGA space or find themselves redundant.”

Innovation and Emerging Markets

While established markets evolve, opportunities emerge in developing economies where insurance penetration remains low. 

Companies like Milvik Bima, which provides health insurance in Asia and Africa, and Igloo, an insurtech platform in Southeast Asia, are expanding into these territories. 

MIC Global has found success offering embedded microinsurance globally.

The sector has renewed its interest in blockchain technology, particularly for parametric insurance policies that automatically pay out when specific conditions are met. 

Meanwhile, Internet of Things devices enable real-time premium adjustments based on sensor data.

Gregory Rozdeba

Gregory Rozdeba, CEO of life insurance provider Dundas Life, reports tangible benefits from such innovation: “Last month, we implemented a pilot program using smart home sensors that reduced claims processing time by 40%. 

“We'll see more personalised, usage-based insurance products that adjust premiums monthly based on actual behavioural data.”

However, the insurtech sector faces its own challenges. Digital insurance platform Wefox reported difficulties in 2024, though smaller MGAs and software developers continue to build products for specific processes.

Risto Rossar

Risto Rossar, CEO of insurance software provider Insly, offers a measured view of the market: “With Insurtech superstar Wefox stumbling and many other B2C disruptors and full-stack insurers not exactly thriving, investors are starting to wonder what value they are creating in the insurtech universe. 

“As investment markets thrive following the election result, we'll likely see a wave of M&A activity and a fresh flow of investment into MGAs.”


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