One year later – the future isn't what it used to be

As we close the year, I have found myself reflecting on legendary US baseballer Yogi Berra's observation that "the future ain't what it used to be". 2025 turned out to be anything but predictable. At the start of 2025, I published What's in store for L&H insurers and reinsurers in 2025? It was a cautiously optimistic outlook for the life & health market. We got most of the short-term outlook right. However, 2025 was a year when longer-term trends emerged and shaped our business.  

Coming into 2025, we believed higher interest rates would be the gift that keeps giving for life business – and we were largely correct. And with 10-year Treasuries around the 4% mark, insurers had that rare combination of (relative) security and yield. As a result, industry-wide profitability was the rule.

This was supported by the expected growth. According to Swiss Re Institute, life premium volume was up 2.2%, and the market is on track to cross the USD 4.0 trillion mark in the next two years. Health insurance premium volume was up by over 5% - the fastest rate in a decade. But there's a catch - a lot of that growth was driven by rising health costs. We'd rather see premium growth from bringing more people into the insurance safety net.

I don't think anyone can write about 2025 without talking about AI – a topic that was, in hindsight, conspicuously absent in my January outlook. There has been a lot of fear of an AI bubble, and whether that fear is justified remains to be seen. I'm optimistic. This technological wave is transformative. I am encouraged by the smart way our industry is investing in AI. Insurers worldwide are now allocating 3–8% of IT budgets to AI, with the focus on realising value from efficiency gains and automating tasks that will free up our experts for higher-value work.

The experience with AI in 2025 has shown that tech alone isn’t transformative. I believe, the organisations making the most progress are those pairing technology with skilled people — underwriters, claims experts, data analysts — who apply judgement and context. We continue to believe that the real value in AI comes when human expertise is enhanced by well-designed AI support.

Insurers will also benefit from AI in parallel industries. Accelerating medical research into cancer and Alzheimer's, for example, could kickstart life expectancy growth.

Coming into 2025, I was cautiously optimistic that we would turn the corner on mortality improvements. That didn’t fully materialize — at least not everywhere. Many regions still report higher all-cause mortality than pre-pandemic norms, but the trend is gradually improving.

In the United States, Swiss Re's largest mortality market, we saw a meaningful shift with excess all-cause mortality falling. I think we can stay optimistic that this will continue. Swiss Re research suggests GLP-1 drugs could reduce all-cause mortality by around 4% in the US general population over the next twenty years; if accompanied by widespread lifestyle changes, that improvement could exceed 6%. In addition, the wave of opioid deaths that contributed to excess mortality appears to have subsided. With hopeful data coming out from the CDC on a slow decline in that area.

The impact of mental health trends is something we have been tracking for a long time as an emerging risk. This year, developments with the mental health impact on claims in Australia revealed an unpleasant fact – that some of our products no longer match the reality of a long-term change. Over the last 10 years, for example, the Council of Australian Life Insurers reported a 700% increase in Total and Permanent Disability (TPD) claims from people in their 30s due to mental health conditions. Over the last 10 years. These claims are flowing into products which simply weren't set up with that underlying assumption.

The answer to this situation will take a lot of work across the industry: From a close examination of exposed portfolios, through to a reassessment of the way we look at insurance by embracing prevention.

What is clear is that early intervention and rehabilitation will need to evolve into integral links in the insure value chain. There is some promising work already happening. Swiss Re and Wysa's mental health apps are showing real promise in deploying AI to guide people through good mental health practices. Wysa have reported reducing symptoms of depression and anxiety by 30%. It's early days, but this is exciting.   

Heading into 2026, our job will be to stay diligent about emerging risks: mental health, metabolic health, mortality trends, upscaling our technology.  And let us not forget that we are here for the long term — because ultimately, this is a life-long business. After all, as Yogi Berra said: "If you don't know where you're going, you might wind up someplace else".