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Global insurers delivered strong premium growth and improved profitability last year, but the industry’s recent gains are largely cyclical and mask unresolved challenges that it confronts, new research released today by Bain & Company finds.
Bain’s Global Insurance Report, Strong Momentum in Insurance, but Structural Challenges Remain finds that global premiums reached an estimated $7.1 trillion in 2025, up from $6.7 trillion in 2024, and doubling in 15 years from $3.6 trillion 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 property and casualty (P&C) insurance, helped by rate increases and a relatively benign year for catastrophe losses. Yet, despite these favorable 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 finds.
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 observes. 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, Bain concludes.
“The Middle East insurance sector is entering a defining period of opportunity. Strong economic fundamentals, ambitious national transformation agendas, and increasing demand for protection are creating the conditions for sustained growth. The insurers that will lead the market are those that go beyond pricing risk to lowering the cost of risk through prevention, AI-enabled productivity, broader access to advice, and more efficient use of capital,” said Fabrice Franzen, senior partner at Bain & Company in the Middle East.
Structural challenges remain unresolved
The industry’s strong 2025 performance does not resolve the structural problems, Bain’s analysis finds. 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 finds. Direct written premiums doubled over the past decade, while expense ratios declined by only 1 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 cautions 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, Bain cautions.
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, Bain advises. Its report identifies 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%, Bain 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 examines how new competitive models may emerge across distribution and product, operations and servicing, and balance sheet and asset management.