For an industry focused on mitigating risk and providing protection, the world’s insurers are enduring a particularly volatile age. The macroeconomic picture is mixed, with inflation stubbornly high and interest rates uncertain. Consumer confidence remains shaky, even though the economic growth cycle appears to have bottomed out. Geopolitical instability remains a perceived threat to global growth, and trade patterns are shifting amid signs of protectionism.
Yet McKinsey’s Global Insurance Report 2025—published in three chapters covering commercial P&C, personal lines P&C, and life—finds significant ground for optimism. In offering granular insights and clear recommendations for how leading insurers can drive performance, the reports identify opportunities for capturing profitable growth as they navigate this shifting landscape.
Personal P&C: Opportunities amid challenges
While personal lines P&C insurance premiums grew by 9.5 percent in 2022–23 to $1.1 trillion—outpacing nominal global GDP by half a percentage point—gross written premiums as a share of nominal GDP remained below prepandemic levels and the coverage gap between mature and emerging economies widened. Industry growth in developed markets was largely driven by rate increases, indicating limited expansion into new risks. Insurance affordability emerged as a significant topic in some markets including the United States because of rising underlying asset prices, the cost of repairs and frequency of damage (especially in areas exposed to physical risk), and rising reinsurance costs.
Amid these challenges, we see a chance for carriers to innovate, expand coverage, and increase the industry’s relevance. Several economies in Latin America and Asia are potential pockets of growth and may enter economic conditions that will enable greater insurance coverage and relevance. The aging global population and evolving customer purchasing patterns present opportunities for carriers to rethink their capabilities and offerings. Distribution is getting closer to the customer as players embed the purchase of insurance into broader purchases of goods and services. New mobility models will force carriers to rethink their approach to distribution, pricing, product design, and claims processing. Amid the continued rise of physical risk, carriers will need to invest in new capabilities to help manage, mitigate, and transfer the risk related to natural disasters. Finally, evolving technology—particularly AI and generative AI—will enable carriers to rethink and innovate the end-to-end value chain.
Commercial P&C: Finding growth beyond rate increases
Global commercial P&C insurance lines continued to deliver strong growth despite more recent evidence of softening conditions. Premiums increased by an average of 8 percent annually in the past five years, while the average combined ratio for the industry trended downward to an estimated 91 percent in 2023. Almost all of this growth was driven by higher premiums, and insurers must now focus on how they capture consistent, profitable growth amid the shifting market landscape.
Although where insurers operate is important, the majority of their financial performance is driven by how they operate. This dynamic applies across both soft- and hard-cycle years and applies generally, although factors such as regional differences may lead to exceptions. While effective portfolio strategy should not be disregarded, execution matters even more, and insurers should double down on their capabilities in their core lines of business to achieve profitable growth.
Life: Embracing a changing landscape
It has been a year of unpredictable mixed signals, uncertainty, and surprising upsides for the life and retirement insurance industry. While unexpectedly resilient macroeconomic conditions provided tailwinds—global GDP growing in real terms, inflation steadily decreasing, and equity markets turning positive—not all product lines and geographies benefited. And while there were bright spots, the industry overall is struggling for relevance.
Yet there are significant opportunities amid the challenges. The life insurance market is being reshaped by the aging global “silver” population of people aged 65 or older and the concentration of wealth among Generation X and retirees. And while changing social norms and ways of living—such as fewer marriages, lower fertility rates, and more dual-income households—are challenging the traditional life insurance model, it presents an opportunity for more flexible policies catering to nontraditional family structures.
McKinsey’s Global Insurance Report 2025—spanning commercial P&C, personal lines P&C, and life—is a collaborative effort representing views from McKinsey’s Insurance practice.
