As we reach the midpoint of 2025, now is a perfect time to reflec
t on some of the key trends that have defined the first half of the year while also looking ahead at what to expect in the back half of 2025.
The property/casualty insurance industry continues to face a l
andscape of compounding economic volatility and evolving consumer behaviors as consumers are becoming more d
iscerning with their finances. While no one can say with certainty wh
at lies ahead, here are a few of the trends we’re watching as the year progresses:
Will Inflationary Pressures Persist?
Sticker shock has become a household phrase in recent years, whether at the grocery store, applying for a mortg
age or looking at one’s insurance premiums. Indeed, inflationary pr
essures have driven up the costs of materials, labor and services, leading to higher claims costs.
To maintain profitability, insurers have raised premiums, in both
personal and commercial lines. This has prompted a growing number of Americans to shop for or switch auto
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insurance providers,
with higher-income individuals interestingly being the most likely to make such changes.
The main question for the back half of the year remains: Will this tr
end finally abate in the second half of the year, or are we facing another cal
endar year defined by rising costs? Continued adverse weather, ch
anges to trade policy and litigation may all contribute to additional higher costs.
It’s Not Just Auto Insurance That Has Consumers Shopping Around
Auto insurance is just one part of the P/C story as the impact of inflatio
n on home insurance is something consumers are paying close attention to.
A significant portion of consumers have never considered supplemental home insurance policies, indicating a preference for more affordable or basic
coverage. At the same time, we find that flood insurance and valuable personal property coverage are the top choices for those who have at least considered s
upplemental policies, suggesting that consumers are prioritizing coverage for specific risks they perceive as more likely or severe.
Related article: What Consumers Think—and Who’s Shopping for Insurance
Related KPMG Analysis: The second annual KPMG American Perspectives survey
Consumers are choosing policies that match their budget, and insurers need to work on how to reduce this churn. The bottom line is, whether home or auto insurance, expect the trend of value as a premium to be top of mind for consumers as well as insurers in the second half of the year.