Nick Ford's Insurance Outlooks for 2025

Commenting on the insurance industry in 2024, Nick Ford, Head of UK Insurance & Financial Services, Hymans Robertson, says: 

“2024 was a very busy year for insurers, primarily driven by regulatory activity and the need to develop processes and systems in preparation for Solvency UK. For those insurers with matching adjustment portfolios, a lot of attention was directed towards developing MA attestation frameworks and assessing appropriateness of fundamental spread add-ons for non-vanilla assets. 

“Those using funded reinsurance placed a fair bit of focus on ensuring that existing risk management processes and frameworks were at the level expected by the PRA in its supervisory statement. At the same time, the BPA market was exceptionally busy over 2024, with the first half of 2024 bringing the highest number of deals ever recorded for a six-month period and Q3 also breaking records in terms of volume. We saw two new entrants transact their first deals and innovation in the form of a profit-sharing BPA transaction.”

Commenting on his expectations for the insurance industry in 2025, Nick says: 

We are anticipating a shift in focus for insurers in 2025. Although we expect there will still be plenty to do on the regulatory side and more analysis of how the IFRS17 balance sheet moves, this will be the first year in some time where there has not been a major regulatory or accounting change programme. This should enable insurers to focus more on strategy, innovation and transformation.  Therefore, we anticipate key themes will include: 

• Finance transformation: in particular reviewing and automating financial reporting processes to enable more focus on analysing results and making decisions off the back of these, rather than the focus on producing the numbers in the first place. Although work has happened on this over the last few years as part of larger change programmes, we anticipate much greater use of technology, across the actuarial process landscape over the coming years as part of dedicated actuarial change programmes

• Insurance strategy: after a relatively quiet time for insurance M&A, we saw a slight uptick in 2024 and we expect that to continue into next year as insurers turn to their upcoming strategies and focus on core blocks of business, resulting in the potential sale of non-core blocks. We anticipate additional new entrants to the BPA market and innovation in later life / retirement products and BPA offerings.

• Regulation: We can’t fully escape it and we anticipate more work to embed MA attestation frameworks following regulatory feedback around the middle of next year, continued regulatory focus on funded reinsurance following feedback on the self-assessment submitted at end of October 2024, and work to produce and understand the results of the 2025 Life Insurance Stress Test (“LIST”)

• Asset opportunities: Finally, we expect to see new asset opportunities arising following the changes made under Solvency UK with insurers’ investment functions seeking and assessing new and innovative opportunities in productive finance assets.