Just when you thought significant areas of the insurance market were softening, a report from Gallagher Bassett (GB) has shown that some industry leaders expect a hardening market to return within 12 months. The Carrier Perspective: 2025 Claims Insights, provides other important information for brokers that could help inform renewals conversations with clients in the months ahead.
The white paper is a compilation of insights from “more than 200 decision makers in the insurance industry” across Australia, North America and the United Kingdom. The annual report aims to analyse the trends and challenges most important to insurers.
An interesting revelation in the paper is how Australia’s insurance leaders surveyed – 86% of them versus 64% of international counterparts – are more confident that the market will harden within 12 months.
Insurance Business asked GB Australia’s John White (main picture, above), head of sales and client services general insurance, if this finding surprised him?
“This finding doesn’t come as a complete surprise, as the Australian market is facing into an increasingly complex regulatory and economic environment,” said Brisbane-based White.
He said, globally, respondents prioritised data and cyber security risks, premium affordability and insurability and increasing market competition.
When asked for the most significant challenge facing their business today, White said the top response globally was data and cybersecurity risks.
“However, in Australia we found that respondents reported changing customer expectations as the number one challenge,” he said. “In addition to this, Australian insurers have spotlighted changing customer expectations as a key indicator of a hardening market.”
White said GB’s insurance experts believe there are several factors influencing this difference.
“First, here in Australia we have a more competitive and customer-centric insurance market,” he said.
The second factor, he said, is “a clear and genuine shift in consumer expectations.” White said this is motivated by financial pressures including the increased cost-of-living and consecutive severe weather events driving claims volumes.
“In line with this, survey results show that climate risk is front of mind for local insurers with more than half of Australian respondents reporting climate change related risks as a key concern,” said White.
Apart from the differences between the views of Australian industry leaders and global counterparts, White said there are some key changes in this report compared to last year.
“The adoption of AI [artificial intelligence] tools in the claims management process has increased from roughly half of AU respondents in 2024, to 88% in 2025,” he said. “This reflects growing acceptance of these tools.”
There is also significantly more demand for coverages that cover climate impacts, particularly from the clients of Australian insurers.
“Last year, 58% of AU respondents reported a moderate to significant increase in demand for climate-specific policies,” said White. “In the 2025 research period, this increased to 92%.”
This figure was much higher than the global average. Globally, about 50% of insurers reported that these litigated claims are settling at higher costs.
For insurance leaders in the UK, for example, this figure was lower at 72%.
“The challenging labour market continues to be a concern for Australian insurers, with flow-on effects to customer service and operational efficiency,” said White. “While investing in training and development is critical to effective claims service, this data could indicate that insurers are investing in alternate areas to retain and develop their employees.”
For example, he said GB has invested significantly in a talent development framework in recent years. He said the firm has also focused on how policies, benefits, flexible working arrangements and workplace wellbeing offerings can support staff “to deliver superior service.”
“The rising costs and increasing complexities of insuring in Australia really highlights the importance of insurers having a future-focused strategy and selecting trusted partners to help them execute on this,” said White.
He remained confident in the global industry’s ability to overcome the challenges ahead.
“While most survey participants foresee some hardening of the market, there continue to be opportunities for insurers looking to differentiate themselves,” he said.
How do you see the insurance market in the months ahead? Hard, soft or in between? Please tell us below
