Bright outlook for agents as life, annuity sales set to climb, Conning reports

The economic forecast is for continued growth in life/annuity and property/casualty insurance premium, two Conning analysts said during a recent webinar.

Four factors are influencing the life/annuity market, said Scott Hawkins, Conning’s head of insurance research. They are economic growth, insurance regulation, growth of artificial intelligence and shifts in reinsurance.

“At the beginning of the year, we thought the new administration would be very positive for economic growth,” he said. “But we thought the overall economic growth this year would be slower than last year. Now gross domestic product is expected to remain positive and it’s still forecast to be so despite the economic turmoil we’ve experienced since Liberation Day."

Inflation has remained low so far this year, he noted, but it’s uncertain how tariffs will drive inflation in the second half of 2025.

As for regulation, Hawkins said the belief was that the new administration and new Congress would swing away from stronger regulations on the insurance market.

“However, there are still significant issues that regulators continue to focus on,” he said. “The role that private equity and private credit are playing in the insurance and reinsurance market, remains under scrutiny, especially at the state level.”

The insurance industry continues to adopt AI, with discussion shifting from what it is to how it will affect the insurance sector and how it’s being used, Hawkins said. “With the looming retirement of the baby boomers, we think AI will be even more important to replace a lot of the vacancies left by retirees.”

P/C landscape challenging

The outlook for P/C sector remains one of strong growth with underwriting profitability despite a bleak catastrophe assumption, said Alan Dobbs, Conning director of insurance research.

Higher interest rates have improved yields on investments, he said. The overall industry outlook is stable “but dependent on adequacy in the face of persistent loss pressures and cat-driven volatility.”

Challenges to the P/C landscape include adverse litigation trends and an evolving array of catastrophic events. Dobbs also cited increasing risks of cyber threats and technological vulnerabilities as requiring industry attention during the year.

“Ransomware remains a key threat,” he said. “Escalating geopolitical tensions are fueling the threat of state-sponsored cyber-attack. These evolving risks are drawing increasing attention from insurers.”

Homeowners insurance continues to be impacted by above-average catastrophe losses, Dobbs said.

“At the beginning of the year, we were particularly concerned about two things – first was the overall state of the homeowners insurance market with concerns about capacity pulling back from some of the key markets. Last year, insured cat losses reached an estimated $82 billion. Our estimates for 2025 are worse.

“The second issue for the homeowners market was the industry’s ability to respond to the California wildfires in January. The concern was that this would test insurers’ ability to meet customer expectations.”

Auto insurance is a bright spot in the outlook, with Dobbs reporting premiums increasing, while growth in losses continues to slow.

Looking ahead in life and annuities

Conning forecasts positive life/annuity profitability, provided another pandemic does not occur, Hawkins said.

“We think the life and annuity sector has a bright future for the next few years,” he said. “When you think about the demographics, premium growth should be strong. If interest rates stay positive and those portfolio yields are up, products will remain competitive and the overall future looks pretty gosh darn bright.”

© Entire contents copyright 2025 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].