Briefing: What is good – and challenging – across UKGI upon entering 2025?

By Stuart Reid

Many of us within the UKGI market will have commented on what we expect 2025 to bring – however, I do feel it is far too easy for sector professionals to forget how privileged we all are to be working in insurance.

Although the industry adage around most of us seemingly falling into insurance jobs by accident is still prolific, we really should celebrate what we do and the unique opportunities, stability and resilience our profession offers.

This is particularly true at a time when it is genuinely difficult to find other industries that are doing quite so well. For example, there is a general consensus among business professionals that UK PLC is heading into choppy waters.

Currents here include a new Labour government that holds very different views to the last Tory administration, influencing a number of political changes, as well as the inauguration of a polarising leader across the pond – Donald Trump once again took ownership of the White House on 20 January 2025.

So much that we currently take for granted is now up for debate and that creates understandable uncertainty.

For example, the retail sector is taking serious action to combat recently announced tax rises – chancellor of the exchequer Rachel Reeves increased taxes by £40bn in her October 2024 Autumn Budget.

While UKGI is not immune to these increases, we do work in an industry that has proved itself time and again to be recession proof – if indeed recession is where the UK is headed.

This is because insurance has the benefit of being – in many cases – a necessity, with income typically received annually. Also any less than 85% customer retention at an insurance firm is frowned upon.

Financial implications

Investment bank Goldman Sachs has suggested that the UK could be subject to around six interest cuts by the middle of next year to combat UK PLC’s sluggish growth.

This will be music to the ears of large brokers where interest cost and, in some cases, the eye-watering amount of debt must be of concern.

Indeed, one of the dark clouds on our industry’s horizon is that the softening market, in fact, softens sharply.

This could catch out highly leveraged businesses thanks to a reducing core income, but a high cost of debt remaining. This is why refinancing is happening at pace.

Proactive recruitment

According to January 2025 research published by insurer Ecclesiastical, 64% of brokers believe recruiting young talent is a strategic challenge.

Really? Has no one in the market spoken to anyone between the ages of 16 and 21 – even though so many of this demographic are desperate to find work?

Apparently, 90% of brokers polled by Ecclesiastical said trade bodies should do more to promote careers in the insurance industry.

This is hogwash. If brokers want youngsters to join the sector, then they need to go out and get them – whether this be through apprenticeship schemes or tapping up university graduates.

National and regional brokers of scale are already doing this – and candidates are there in droves.

I spent much of last year talking to various cohorts of youngsters entering the insurance industry and the common refrain they told me is that we should not wait for them to approach sector opportunities, but we must get out there and entice them.

This is especially important as opportunities abound for promotion – despite a widespread fear that it is only grey hairs that fill the top jobs in the sector.

Seismic changes

We are seeing seismic changes in the industry.

For example, Specialist Risk Group has reported that it has doubled in size. PIB Group has won the European expansion battle, in my opinion, while Gallagher repeats and bests past large deals and Aon re-enters the UK acquisition ring with signature buys and deep pockets.

Insurance Times’ Top 50 Brokers 2024 report, published in December 2024, stated that aggregate brokerage across these high performing firms increased by £2.6bn since the publication of 2023’s report, to £16.1bn.

While this is heartening news for these businesses, it also demonstrates a fantastic opportunity for smaller firms to move into the space vacated by ever-growing brokers and the businesses they acquire.

And finally, the pendulum swings on compliance.

The FCA is not going away – far from it – and rightly so considering January 2025’s Which? report, which described the “appalling treatment” some customers have received when making a claim.

But the government has promised a lighter and more relevant regulatory touch – timely considering the motor finance scandal that is about to explode.

So, when reflecting on our sector, do take time to look around and judge what privileges we enjoy. To forget that is to miss why we have myriad reasons to be cheerful.