There is a theory that if there is an accident in the middle of an intersection, each individual standing on a different corner will have a different perspective about fault, how the accident could have been avoided, results or implications, and much more. This time of year, there are countless individuals standing on seemingly countless corners. In the property and casualty (P&C) insurance space, it’s beneficial to get multiple perspectives about potential trends and what impact trends may have on the industry in the coming year.

Hard to believe we are almost finished with 1/12th of the year! The perspective from our corner of the industry is focused on four trends with the potential to shape the P&C insurance landscape in 2025 and for many years to come, including the rising popularity of excess and surplus (E&S) insurance, advancements in exposure management and geospatial technology, the increasing integration of artificial intelligence (AI), and the dynamics of Florida’s takeout business. These developments are poised to redefine how the industry operates and addresses challenges.

The Rising Popularity of E&S Insurance

Once a testing ground for coverages without the track record or predictability to be good for primary insurance markets, E&S insurance today is a dynamic solution for addressing complex, unconventional risks. Growth in this segment stems from emerging perils, including heightened natural catastrophe activity and unique exposures, like cyber threats and cannabis-related risks.

Flexibility is a defining feature of E&S insurers, enabling tailored solutions for high-risk scenarios that traditional admitted markets often cannot cover. For example, in wildfire-prone regions of California, E&S insurers have stepped in to provide policies after admitted insurers reduced exposure. Similarly, in Florida’s most hurricane-prone areas, E&S policies have filled gaps left by traditional insurers retreating due to reinsurance cost pressures.

Looking ahead, E&S insurers are poised to succeed by covering more and more emerging risks, such as climate resilience projects and renewable energy ventures. The ability to design highly customized policies will position these insurers as leaders in navigating uncharted risks. In the future, it seems likely that E&S will move into a primary market position, and much of the emerging risk business that would once have transitioned to admitted insurers will stay in the non-admitted space.

Advances in Exposure Management and Geospatial Technology

The rising frequency and severity of natural disasters have placed exposure management at the forefront of risk assessment. Core systems with pre-integrated exposure management solutions will have an edge in 2025, and geospatial technology, paired with advanced analytics, will enable insurers to evaluate, price, and mitigate risks more effectively.

Aerial imagery and satellite data, for example, were critical to successfully assessing post-event losses from Hurricane Ian in Florida. These technologies allowed insurers to evaluate damage quickly and allocate resources efficiently. Today, geospatial tools are helping map wildfire-prone zones in California, aiding insurers in making informed underwriting decisions and communicating risks to policyholders.

In 2025, insurers taking advantage of exposure management solutions with geospatial data and predictive analytics will redefine how risks are priced and managed. Real-time weather and environmental data will feed directly into underwriting systems, enabling dynamic adjustments to coverage terms based on shifting conditions. Additionally, partnerships with public agencies and private data providers could broaden the scope of risk maps, helping insurers preemptively mitigate losses and reduce claims severity.

The Role of Artificial Intelligence in Insurance

Artificial intelligence (AI) has been transforming the P&C insurance industry for years, revolutionizing underwriting, claims management, and fraud detection. In 2025, the insurance industry seems ready to move beyond pedestrian uses of machine learning (ML), natural language processing (NLP), and robotic process automation (RPA) applications, as well as conversational AI or chatbots. Generative AI (Gen AI) is already being used to further streamline operations and enhance decision-making processes, but that is just the tip of the iceberg.

The next frontier for AI in insurance is an area for which Gen AI solutions seem custom-made, hyper-personalization. Gen AI tools in the coming year will be asked to deliver individualized policy options by analyzing customer data to create seamless experiences that align with specific coverage needs. Additionally, AI-powered chatbots are already evolving into virtual agents, insurance advisors, and claim managers capable of guiding clients through complex policies and claims processes. As AI tools become more autonomous, insurers may also explore predictive claims resolutions, offering settlements before customers even file claims.

Florida’s Takeout Business and Its Industry Implications

Florida’s insurance market continues to face challenges from hurricane activity, litigation costs, and a shrinking pool of admitted insurers. The takeout business—where private insurers assume policies from the state-backed Citizens Property Insurance Corporation—remains a vital strategy for addressing these issues.

Recent developments highlight the importance of this market. Universal Insurance Holdings, for example, has actively participated in takeout programs, assuming thousands of policies to reduce Citizens’ exposure. However, private insurers face challenges such as:

• Risk Concentration: Managing the potential for catastrophic losses in hurricane-prone regions.
• Regulatory Pressure: Maintaining solvency while keeping premiums affordable.
• Reinsurance Costs: Rising costs threaten competitiveness.

To thrive, Florida insurers must explore innovative approaches, such as parametric insurance, which provides pre-determined payouts based on specific triggers, like wind speed or rainfall. Expanding reinsurance options through catastrophe bonds or other alternative risk transfer mechanisms could also ease financial strain. Expect continued legislative efforts to stabilize the market, potentially introducing incentives for private insurers to participate in takeout programs.

The Path Forward

No matter your position in the industry or your perspective, each trend is a vital piece of a larger picture. Insurers, MGAs, and brokers that embrace the opportunities upcoming in E&S, invest in exposure management solutions with geospatial data and predictive capabilities, integrate AI solutions, and take the time to figure out how Florida takeout business can contribute to profitability will be the ones to overcome market hurdles. The coming year presents significant opportunities for those who can adapt. By focusing on assembling these critical pieces, the industry can create a cohesive and thriving future.

Peter Crowe is the president of FOCUS. He can be reached for further comment or information via email at peter.crowe@teamfocusins.com.