Research shows that the general insurance sector in the UK will face a variety of macroeconomic risks that will shape how businesses operate and recruit talent. From global economic uncertainties to technological disruptions, these risks will require insurers to be agile and forward-thinking. For both employers and professionals, understanding these potential challenges is essential for navigating the insurance landscape.
“Data governance, ethical AI deployment, third party risk management and robust cyber security will be critical to insurance operations throughout 2025. Partnering with the right recruitment consultant who not only has excellent knowledge of the UK and international market but more importantly understands the specific skillsets and expertise insurers will need in the future is key to success. With competition so high for specialist talent businesses need to adapt their strategies to engage passive top talent”, says Allison Marshall, Client Partnerships Director.
-(22).png)
Economic volatility and inflationary pressures
The macroeconomic environment in 2025 will be shaped by continued global economic volatility. Following the impacts of the COVID-19 pandemic and ongoing geopolitical tensions, inflation may remain a concern, impacting both operational costs and consumer behaviour. The current UK inflation rate is around 2.6%, with the Bank of England and Office for Budget Responsibility predicting that this is likely to increase to 2.75% in the second half of the year. GDP growth is expected to rise to 1.2%, while consumers stay cautious and save more. Business investment should recover as interest rates ease and growth improves (KPMG: UK Economic Outlook). Overall, economic volatility could lead to shifts in the frequency and severity of claims, influencing how insurers assess risk and price policies.
To mitigate the impact of economic volatility, insurers will need to adjust pricing models and risk management strategies accordingly. This may involve hiring professionals with expertise in financial risk analysis, economic forecasting, and claims modelling. Insurers will also need to enhance their ability to pivot quickly in response to changing economic conditions, meaning that employees with strong adaptability and decision-making skills will be in high demand (EY Global: Navigating volatility with insurance digitisation).
Employers should consider investing in training programmes to equip their teams with the necessary tools to navigate economic uncertainty. Furthermore, firms should prepare for changes in customer behaviour due to rising costs and higher expectations.
Professionals in the general insurance industry should be aware of how macroeconomic trends, such as inflation and changing interest rates, can affect the sector. Candidates should look to develop expertise in financial risk management, predictive analytics, and market forecasting to remain competitive in the job market. Having a solid understanding of the broader economic landscape will be a key differentiator for those seeking to move into senior positions in risk management or underwriting.
Cybersecurity threats and technological disruption
As technology continues to evolve, the risk of cyberattacks and data breaches will remain a pressing concern for the general insurance industry. According to The UK National Cyber Security Centre (NCSC), the insurance sector remains a high target for cyber threats, with attacks increasing in sophistication and frequency (National Cyber Security Centre: Chapter 01: Countering the cyber threat). With the increasing reliance on digital platforms and the growing complexity of cyber threats, insurers must continue to invest in extensive cybersecurity measures to protect sensitive client data and maintain trust. Additionally, technological disruption, particularly in the form of InsurTech and AI-driven underwriting, will continue to challenge traditional models (McKinsey: Insurance 2030: The impact of AI on the future of insurance).
It’s therefore never been more important for businesses to hire professionals with expertise in cyber risk management, data privacy, and threat intelligence. Additionally, as InsurTech firms continue to disrupt the insurance landscape, employers should focus on integrating emerging technologies such as blockchain, AI, and automation into their operations to maintain a competitive advantage (TechBullion: InsurTech: The Future of Insurance with AI, Automation, and Analytics).
Employers will also need to stay ahead of the curve in adopting digital solutions for underwriting and claims management. This might involve creating roles for technology-focused professionals who can work alongside insurance teams to drive innovation and streamline processes.
Cybersecurity expertise will be crucial for job seekers in 2025, especially as insurers face heightened digital risks. Candidates should focus on acquiring skills in cyber risk management, data encryption, and information security protocols. Moreover, professionals with expertise in digital transformation and InsurTech will be in high demand. For those in traditional insurance roles, understanding how technology is transforming underwriting, claims processes, and customer service will be critical. Professionals with the ability to adapt to technological change and incorporate it into their work will have a clear advantage in the evolving job market.
Regulatory changes and compliance risks
Throughout 2025, insurers will face new challenges related to compliance with environmental, social, and governance (ESG) criteria, as well as potential changes in tax laws, data protection regulations, and financial reporting standards. The Financial Conduct Authority (FCA) has already set out new rules around conduct in the insurance sector, particularly with regard to fair treatment of customers and transparency in pricing. Regulatory scrutiny is expected to increase, particularly in areas like pricing transparency, customer protection, and claims handling (FCA: FCA calls on insurers to ensure they demonstrate fair value and good customer outcomes).
The need for professionals with expertise in financial regulations, ESG compliance, and data protection will grow, and insurers should be proactive in hiring individuals who can help mitigate regulatory risk. These professionals will also play a key role in maintaining transparency with customers and managing reputational risks associated with regulatory breaches. Job seekers should consider pursuing certifications in financial regulations, ESG compliance, or data privacy to strengthen their skillset and enhance their career prospects (Grant Thornton: ESG in insurance: how to keep up with ESG risks).
Climate change and natural disaster risks
The increasing frequency and severity of natural disasters will continue to present significant risks for the general insurance industry. In the UK, this may manifest in more frequent flooding, storms, and other weather-related claims, while globally, insurers will need to address rising claims in regions affected by extreme weather events (Tyers Insurance Brokers: Changing Weather and the Impact on the UK Insurance Market). Insurers should improve their resilience to climate risks, particularly regarding flood and storm-related claims, which requires more robust catastrophe models. These challenges will require insurers to reassess their risk models and pricing strategies for certain lines of business, particularly property and casualty insurance.
To stay ahead and ensure operational models can adapt, it’ll be important for employers to hire professionals with expertise in climate risk assessment, environmental risk modelling, and catastrophe modelling to better predict and manage the impact of climate-related events (AON: How Climate Modelling Can Mitigate Risks and Improve Resilience in the Construction Industry). A focus for 2025 will be how insurers offer tailored solutions to consumers in regions vulnerable to natural disasters which are often subject to unlicensed surplus lines insurers who offer coverage for risks that admitted carriers may reject.
People with knowledge of environmental science, climate risk analysis, and sustainable insurance products will be in high demand as insurers look to adapt to the changing risk landscape. Those with the ability to assess and manage emerging environmental risks, particularly in property and casualty insurance, will have a competitive edge in the job market (Deloitte Insights: Strengthening insurance climate risk governance).
Adaptation and agility will define success
As the general insurance industry faces a rapidly changing macroeconomic environment in 2025, both employers and professionals must focus on adaptability, technological innovation, and regulatory compliance to thrive. Insurers will need to prioritise cyber resilience, and climate change adaptation. For professionals, developing expertise in emerging technologies, regulatory compliance, and sustainability will be essential for staying competitive in this dynamic sector.
By preparing for these key risks and fostering a culture of agility and innovation, businesses and professionals can ensure they are well-positioned for success in 2025 and beyond.
If you’re looking to hire specialist talent, need some intel in the insurance employment market or are looking for a new career opportunity contact one of our insurance consultants who will be happy to help.
Sources:
AON: How Climate Modelling Can Mitigate Risks and Improve Resilience in the Construction Industry
Deloitte Insights: Strengthening insurance climate risk governance
EY Global: Navigating volatility with insurance digitisation
FCA: FCA calls on insurers to ensure they demonstrate fair value and good customer outcomes
Grant Thornton: ESG in insurance: how to keep up with ESG risks
McKinsey: Insurance 2030: The impact of AI on the future of insurance
National Cyber Security Centre: Chapter 01: Countering the cyber threat
TechBullion: InsurTech: The Future of Insurance with AI, Automation, and Analytics
Tyers Insurance Brokers: Changing Weather and the Impact on the UK Insurance Market
.png)
.png)
.png)
.png)
.png)
.png)
.png)