Three Major Shifts Reshaping Insurance Markets in 2025

Catastrophic weather events, digital transformation and evolving household demographics are reshaping the insurance landscape. The 2025 Property and Casualty Annual Insurance Outlook from TransUnion draws from exclusive data and market analysis, and has revealed an industry at a crossroads — with some sectors finding their footing while others face mounting challenges.

Auto insurance returns to profitability

The past two years has seen a shift for auto insurers. After a period of belt-tightening that helped carriers streamline operations and reduce costs, relief finally arrived from state regulators. Though regulators initially pushed back on rate increases, they've now approved premium hikes that outpace rising costs.¹ The result? Carriers are stepping back into markets they'd abandoned and ramping up their advertising efforts.

Property faces climate and household risks

Property insurers aren't sharing in the optimism. Four major hurricanes made landfall in 2024 alone, continuing a concerning trend. This decade has already seen five of the six most expensive years for catastrophic claims in industry history, as seen in the map below from NOAA National Centers for Environmental Information.²

Beyond weather events, changing household composition adds another layer of risk. The growing trend toward multigenerational households means more wear and tear on home systems, leading to increased fire and water damage claims.³

Digital shopping increases while conversions decline

Rising prices are driving increased shopping activity. While Q3 2024 year-over-year shopping activity jumped 16% for both auto and property coverage,⁴ only 38% of shoppers switched carriers.⁵ Unable to find lower prices, most opted to stay put and raise deductibles or enroll in telematics programs instead.

Meanwhile, carriers have shifted their marketing strategies significantly — cutting TV spending by 15% while bolstering their digital presences, evidenced by a remarkable 346% increase in online display advertising, an 81% rise in social media and a 55% boost in online video advertising.⁶

Commercial profits remain elusive

Commercial auto's struggles make personal auto's challenges look mild by comparison: Since 2012, it has seen only one profitable year (2020 — when pandemic lockdowns kept vehicles off the roads).⁷

In addition, social inflation — the increase in legal liability arising from skyrocketing jury verdicts driven by a combination of pro-plaintiff juries, third-party litigation funding and aggressive legal advertising — hit this sector particularly hard. Between 2014 and 2023, economic and social inflation drove up commercial auto liability claims by $42.7 billion to $55.8 billion.⁸ Even more telling was the fact 23% of all jury awards over $10 million involved auto accidents.⁹

Personal lines hold untapped commercial customers

The most promising commercial lines opportunity might be hiding in plain sight — your personal lines book. TransUnion estimates over 15 million business owners carry only personal lines coverage.¹⁰ From home-based businesses to short-term rentals and rideshare vehicles, these customers need commercial coverage but might not realize it. The digital gap remains significant: While 82% of business owners would gladly quote commercial coverage online, only 36% successfully navigate the process.¹¹

Strategic priorities for 2025

Success in 2025 demands a delicate balance. Yes, you need data-driven marketing to capture digital shoppers. Yes, your pricing must reflect today's risk realities. But don't overlook cybersecurity — one in three businesses reported cyber incidents in the past two years.¹² The winners will be carriers who master these challenges while maintaining fair treatment in pricing and claims.

Ready to dig deeper? Download the complete 2025 Property and Casualty Annual Insurance Outlook for detailed insights and analysis.