Rising to the challenge, how insurers will adapt in 2025

The global insurance industry is on the brink of transformation as geopolitical tensions, accelerating AI adoption, and escalating climate crises converge to create a perfect storm in 2025. From navigating a volatile economic landscape to addressing emerging risks in cyber and ESG, insurers face a year of unparalleled complexity and opportunity.

Simon Laird, Partner and Global Head of Insurance at RPC, comments: “2025 will be a year of resilience and transformation for the insurance sector. The challenges of AI, environmental crises, and geopolitical instability require innovative responses, agile regulation, and a proactive approach to risk assessment. As always, RPC remains committed to guiding clients through these complexities with our market-leading expertise.”

Released today, RPC's Annual Insurance Review 2025 delivers a deep dive into the key issues shaping the industry. Packed with insights from the firm’s leading lawyers and Global Access partners, the review unpacks the challenges ahead and equips insurers with the foresight to navigate this pivotal year.

Geopolitical and economic turbulence

In 2024, global conflicts and political polarisation surged, with wars breaking out or intensifying in multiple regions. Economic struggles, compounded by inflation and record insolvencies, are expected to persist into 2025, increasing claims in areas like directors and officers (D&O) liability and professional negligence.

AI, a double-edged sword

AI’s rapid integration across industries introduces opportunities for efficiency and innovation, particularly in claims management, fraud detection, and underwriting. However, 2025 is likely to see heightened regulatory scrutiny and risks associated with generative AI, including data breaches and sophisticated cyberattacks.

Environmental and climate challenges

Climate change continues to drive extreme weather events, from hurricanes to wildfires, testing insurers' resilience. In the Netherlands, litigation on climate responsibility intensifies, while new EU sustainability regulations demand increased transparency and risk modelling from insurers globally.

Cyber risks and resilience

The cyber insurance sector faces a challenging year ahead as incidents of ransomware and multifaceted extortion continue to evolve. Insurers are reevaluating their approach to ransomware payments and implementing stricter security assessments.

Regulatory shifts

Key changes, including the EU's AI Act and global ESG reporting standards, will reshape insurance frameworks in 2025. In the US, new federal leadership could significantly impact regulatory policies, easing some business constraints while introducing fresh challenges in emerging sectors.

Litigation hotspots

Across jurisdictions, class actions related to greenwashing, climate claims, and professional liability are anticipated to rise. In the aviation sector, landmark litigation involving lessors and insurers could redefine policies in the wake of global conflict.

For more insights and to read the full report click here.