As we reach the midpoint of 2025, now is a perfect time to reflect on some of the key trends that have defined the first half of the year while also looking ahead at what to expect in the back half of 2025.
The property/casualty insurance industry continues to face a landscape of compounding economic volatility and evolving consumer behaviors as consumers are becoming more discerning with their finances. While no one can say with certainty what lies ahead, here are a few of the trends we’re watching as the year progresses:
Will Inflationary Pressures Persist?
Sticker shock has become a household phrase in recent years, whether at the grocery store, applying for a mortgage or looking at one’s insurance premiums. Indeed, inflationary pressures have driven up the costs of materials, labor and services, leading to higher claims costs.
To maintain profitability, insurers have raised premiums, in both personal and commercial lines. This has prompted a growing number of Americans to shop for or switch auto insurance providers, with higher-income individuals interestingly being the most likely to make such changes.
The main question for the back half of the year remains: Will this trend finally abate in the second half of the year, or are we facing another calendar year defined by rising costs? Continued adverse weather, changes to trade policy and litigation may all contribute to additional higher costs.
It’s Not Just Auto Insurance That Has Consumers Shopping Around
Auto insurance is just one part of the P/C story as the impact of inflation on home insurance is something consumers are paying close attention to.
A significant portion of consumers have never considered supplemental home insurance policies, indicating a preference for more affordable or basic coverage. At the same time, we find that flood insurance and valuable personal property coverage are the top choices for those who have at least considered supplemental policies, suggesting that consumers are prioritizing coverage for specific risks they perceive as more likely or severe.
Related article: What Consumers Think—and Who’s Shopping for Insurance
Related KPMG Analysis: The second annual KPMG American Perspectives survey
Consumers are choosing policies that match their budget, and insurers need to work on how to reduce this churn. The bottom line is, whether home or auto insurance, expect the trend of value as a premium to be top of mind for consumers as well as insurers in the second half of the year.
An Eye on Regulation
Regulation for insurance is primarily set at the state level, and the National Association of Insurance Commissioners (NAIC) has set its 2025 road map. The road map’s initiatives hit on core areas such as strengthening financial governance, modernizing the risk-based capital RBC framework, new principle-based methodologies, artificial intelligence, cybersecurity and catastrophe risk management.
As insurers advance their compliance frameworks, they’ll need to remain agile and lean into emerging technologies, including the deployment of agentic AI on their compliance platforms.
Looking ahead, as noted earlier, the trend of consumers placing a value on premium is not likely to abate in the second half of the year. Insurers will continue to need to adapt to the rapidly evolving economic landscape as they grapple with inflationary pressures and consumers that are increasingly discerning when it comes to pricing.
Topics Trends Property Casualty
Was this article valuable?
Here are more articles you may enjoy.
Honda Recalls More Than 259,000 Cars in the US Due to Brake Pedal Issue 
Erie and Philadelphia Insurance Still Working on Restoring Their Networks 
Walmart to Pay $10M to Settle FTC Lawsuit Over Money Transfer Fraud 
Trump Can’t End FEMA But It Needs Reform, Says Obama’s FEMA Head 
