2024’s Big Insurance Shifts and What’s Coming in 2025
Commercial insurance distribution underwent significant shifts in 2024. From broker consolidation to the rise of digital channels and embedded insurance, the landscape is evolving rapidly. We review how distribution changed in 2024 (with a U.S. focus and some global context) and what to expect in 2025 across several key areas.
Broker Landscape Shifts
Brokers are consolidating and adopting new strategies, changing how they serve commercial clients.
Consolidation Reached New Heights: The year 2024 saw a wave of mega-deals among insurance brokers, further concentrating the market. The three largest brokers – Marsh McLennan, Aon, and Arthur J. Gallagher – each closed or announced multi-billion-dollar acquisitions.
In April, Aon completed a $13 billion acquisition of NFP, a major middle-market brokerage. Marsh McLennan’s agency unit tripled its M&A activity and acquired McGriff Insurance Services for $7.75 billion. By December, Gallagher agreed to buy AssuredPartners (the 5th largest P&C agency) for $13.45 billion, a deal slated to close by Q1 2025.
Overall, about 750 U.S. agency/brokerage transactions were recorded in 2024 – roughly 10% fewer than 2023, but activity picked up in late 2024, setting the stage for a potential surge in 2025 as interest rates stabilize. Private-equity-backed brokerages (like Broadstreet, Hub, and others) continued to drive ~72% of deals, indicating sustained investor appetite for insurance distribution.
Shift in Commission Structures and Revenue Mix: Broker compensation models are evolving. Robust premium growth in commercial lines (P&C premiums up 10.5% in H1 2024) boosted traditional commission income, but many brokers expanded fee-based and value-added services.
In fact, 64% of high-performing agencies report that over 15% of their revenue now comes from non-commission sources (e.g. consulting fees, technology services).
There is also greater use of contingent or performance-based commissions tied to profitability, though these face regulatory scrutiny. Notably, brokers are diversifying across product lines – for example, bundling commercial P&C with benefits – to optimize revenue. Multi-line brokers enjoy 18% higher revenue per client on average by cross-selling services.
We also see more brokers willing to negotiate flat fees for large clients who demand transparency. These shifts indicate a move away from pure “more premium = more commission” toward a more strategic, service-oriented compensation approach.
Operational Changes and Digital Adoption: Despite consolidation, the broker’s role remains vital – especially for complex commercial risks – but how brokers operate is changing. Large brokerage firms are investing heavily in technology to service clients and interact with carriers. For instance, brokers increasingly use digital platforms for policy placement and data analytics to advise clients on risk. Many have set up client portals and AI-driven tools to manage certificates, claims, and renewals more efficiently. However, industry experts stress that relationships are still king – new tech has impact only if coupled with strong client relationships
In 2024, top brokers balanced high-tech and high-touch: using tools to quote and bind simpler policies quickly, while providing consultative expertise for tailored programs. Looking ahead to 2025, we can expect brokers to further embrace digital workflows (to boost productivity) and possibly integrate AI assistants for tasks like analyzing coverage options. Broker M&A is likely to continue – potentially rebounding as forecasts suggest – including acquisitions of insurtech agencies. In addition, insurers and regulators may put pressure on brokers for greater transparency in compensation, prompting more innovation in commission models.
Large Commercial Insurers Adapting to Digital Trends
Digital Transformation Accelerates: Major commercial insurance carriers in 2024 doubled down on digital initiatives to stay competitive. Many large insurers launched or enhanced online platforms to streamline quoting and servicing for business customers and brokers. According to a Gartner report, setting up digital ecosystems for partners and customers was a top priority for insurance CIOs in 2024
This led carriers to expand API connectivity and portal capabilities, enabling faster interactions with agencies and even direct customers. For example, The Hartford and Travelers invested in upgraded agent portals for small business policies, offering real-time quotes and policy issuance. Many insurers also scaled up data analytics teams to leverage internal and third-party data for better risk selection and pricing
Those that invested in advanced analytics early have reported above-average performance, using tools for “what if” risk scenarios and sharper pricing during renewals
Partnerships with Insurtechs: Rather than build everything in-house, incumbent insurers increasingly partnered with insurtech startups in 2024 to enhance their capabilities. These partnerships spanned distribution, underwriting, and services. A notable example was Arch Insurance (North America), which partnered with Cytora – a digital risk processing platform – to digitize its risk intake and underwriting workflows.
This collaboration allows Arch to leverage AI and automation for faster submissions processing and improved underwriting insight, benefiting both brokers and clients with quicker turnaround. Arch had similarly partnered with InsurTech firms Upfort and Thimble in previous initiatives.
Another example is Nationwide’s partnership with TrustLayer to create a digital certificate-of-insurance verification platform for businesses, simplifying a traditionally manual process. Large insurers like Chubb, AIG, and Zurich also invested in or partnered with tech firms to target specific needs – from AI-driven fraud detection to digital distribution of specialty products. These alliances indicate a shift in mindset: big carriers are embracing insurtechs as collaborators to fill tech gaps (such as better UX, automation, or niche underwriting models) and accelerate innovation.
Market Positioning and Innovation: The competitive positioning of major commercial insurers in 2024 was heavily influenced by their ability to innovate in distribution. Many global insurers looked to ecosystem plays – embedding their products in various channels – as a growth strategy. Insurers that traditionally relied on broker networks started exploring direct-to-customer avenues for certain small business segments, often through subsidiary brands or online platforms. For instance, Berkshire Hathaway’s biBERK and Hiscox’s online portal continued to market business policies directly to entrepreneurs, pushing incumbents to consider multi-channel approaches. Additionally, carriers emphasized being “easy to do business with” for brokers, knowing that brokers control much commercial premium. This meant investments in faster quote turnaround, more flexible underwriting, and value-added risk management services that brokers could pass to clients. Some leading carriers even began offering risk advisory or analytics tools to brokers to deepen those relationships. Globally, European giants like Allianz and AXA pursued digital upgrades and insurtech investments, while in Asia, insurers leveraged mobile platforms to distribute SME insurance at scale – providing a glimpse of innovative models that could expand in the U.S.
Looking to 2025, expect big insurers to continue this digital trajectory. We will likely see more carrier-insurtech joint ventures and possibly outright acquisitions of tech startups that can provide an edge in distribution or underwriting. Some carriers may specialize their distribution strategy – for example, focusing certain business units on direct digital sales for very small businesses, while keeping brokers for mid-large accounts. The winners will be those who effectively blend high-tech capabilities with the trust and capacity advantages of a large balance sheet. As one industry CEO noted, carriers that adapt and improve the value they offer to brokers and clients will find rewarding opportunities even amid uncertainty.
Traditional vs. New Distribution Models (D2B, Embedded, Digital)
Direct-to-Business (D2B) Growth: Traditionally, commercial insurance – especially for mid-size and large companies – has been broker-dominated. In 2024, that remained true for complex risks, but there was notable growth in direct-to-business insurance models for small businesses. Digital-first insurers and MGAs like Next Insurance, Thimble, and Hiscox (online) made it easier for small business owners to purchase coverage like general liability or professional liability online without a broker. Established carriers also launched D2B initiatives: for example, Liberty Mutual’s CoverLink platform and Hartford’s digital quoting tool allowed small contractors or freelancers to get quotes straight from the carrier. These direct channels gained traction particularly for micro businesses and startups that value speed and simplicity over personalized broker service. Industry analysts estimate that an increasing share of micro-commercial policies (e.g. sole proprietors) were bound via direct or online channels in 2024, though brokers still handle the majority of premiums overall.
Embedded Insurance on the Rise: One of the most disruptive distribution trends in 2024 was the surge of embedded insurance offerings. Embedded insurance means coverage is sold as an add-on within another product or service’s purchase flow. While common in personal lines (like travel insurance at a flight checkout), 2024 saw more embedded insurance targeting businesses. For instance, software platforms serving small businesses began integrating insurance offers directly. A notable use case is a small business SaaS provider teaming with an insurer to offer, say, professional liability coverage during the customer’s sign-up process.
Similarly, e-commerce marketplaces started embedding insurance for their sellers (e.g. product liability coverage available when listing an item for sale). These models bring insurance closer to the point of need, potentially capturing customers who might not seek out a broker or standalone policy. According to McKinsey, distribution is indeed moving closer to customers by embedding insurance into broader purchases of goods and services.
This trend opens new channels for insurers to reach the underinsured and for non-insurance companies to add value for their users.
Digital Brokerages and Marketplaces: The line between traditional and new models is blurring. 2024 saw the expansion of digital brokerages and marketplaces that combine online convenience with expert support. Firms like Embroker and Bold Penguin (a digital exchange for commercial quotes) enabled businesses or small agents to get multiple quotes through one online interface. These platforms often use AI triage to match submissions with appropriate carriers, speeding up a process that used to involve numerous phone calls and emails. Traditional brokers responded by improving their own digital capabilities – many launched client-facing online portals for certificate requests, policy reviews, and even quoting small policies, thereby offering a more self-service experience to clients while still providing advice when needed. Wholesalers and MGAs also embraced digital distribution, with several launching broker-facing apps for quicker access to specialty programs.
Outlook for 2025: Expect omni-channel distribution to become the norm. Businesses will increasingly have the option to buy coverage through the channel they prefer – whether that’s a trusted broker relationship, a quick online purchase, or seamlessly embedded in another transaction. Direct-to-business channels will likely expand into more complex coverages as technology improves underwriting, but brokers will remain critical for tailoring solutions and navigating claims or risk management. Embedded insurance, in particular, is forecast to boom – the global embedded insurance market (across personal and commercial lines) is projected to grow from about $156 billion in gross premiums in 2024 to over $700 billion by 2029.
In 2025, we anticipate more partnerships between insurers and non-insurance platforms – for example, collaborations where a financial services platform or a B2B marketplace offers insurance from a carrier at checkout. Traditional agencies might also get in on embedded insurance: some forward-thinking brokers are partnering with fintech and e-commerce firms to be the behind-the-scenes broker for embedded coverage (providing the licensed expertise while the front-end platform handles customer interaction). All these models will coexist, pushing each player to clarify their value. Traditional agents/brokers will focus on being risk advisors and complex problem-solvers, while new distribution models compete on ease and context. Ultimately, the industry is moving toward a more customer-centric approach, meeting business customers where they are – whether in person, on the web, or within another service.
Digital Platforms and AI in Underwriting
Advanced digital platforms and AI algorithms are increasingly used to assess risks and price policies in commercial insurance.
Automation of Underwriting Workflows: In 2024, commercial insurers made big strides in automating risk assessment and underwriting through digital platforms. Many carriers rolled out end-to-end underwriting workbenches that ingest submissions (often from brokers’ emails or portals) and automatically evaluate them using data and algorithms. For simpler small commercial risks, straight-through processing (STP) became more common – meaning a business could submit info and get an instant bindable quote with minimal human intervention. Machine learning models have been trained on years of loss data to help price policies more accurately. According to industry reports, AI can now handle a lot of the repetitive processing, freeing underwriters to focus on complex cases.
For example, AI tools extract and analyze data from ACORD applications, financial statements, or even building images to quickly determine hazard levels. Companies like Chubb and CNA invested in such platforms to speed up quoting for target segments (e.g. contractors, retail shops), giving them a competitive edge in responsiveness.
AI-Powered Risk Assessment: 2024 was also the year that generative AI and advanced analytics started being applied in underwriting. Several insurers and insurtechs introduced AI systems capable of reading unstructured data (like loss run reports or engineering surveys) and drawing insights for underwriters. A case in point is Arch Insurance’s deployment of Cytora’s AI platform, which uses artificial intelligence to triage commercial submissions and flag key risk information.
This kind of AI-driven intake can increase speed and even improve risk selection by highlighting exposures that might be missed by a cursory manual review. Cytora, for instance, applies Large Language Models (LLMs) to commercial insurance documents to extract relevant factors, aiming to boost accuracy in underwriting decisions. Beyond triage, AI is being used for pricing sophistication – for example, algorithms that consider dozens of variables (economic data, location risk scores, etc.) to refine the base rates set by actuaries. Some insurers in 2024 reported using AI to predict which accounts are likely to be profitable or which prospects to target, effectively guiding underwriting appetite.
Efficiency and Accuracy Gains: The use of digital platforms and AI has started to pay dividends. Underwriters armed with these tools in 2024 could handle higher volumes without sacrificing quality. By automating routine tasks and providing decision-ready analytics, AI platforms gave underwriters deeper insights into their portfolios.
In practice, this meant faster turnaround on quotes and more consistent underwriting outcomes. One global survey noted that underwriters’ productivity increased where AI was implemented, and carriers saw improved combined ratios as pricing became more precise. However, insurers also recognized the need for human oversight – AI suggestions are reviewed by experienced underwriters, especially for large or unique risks, to ensure sound judgment and compliance. Another benefit of digital underwriting platforms is improved broker experience: brokers got quicker responses and more transparency into why a risk is or isn’t a fit, thanks to data-driven feedback from carrier systems. All of this strengthened insurer-broker relationships in the submission process.
What’s Next in 2025: We expect broader adoption of AI underwriting across the industry. In 2025, more carriers will likely use AI not just for small business, but in mid-market underwriting – for example, leveraging AI to analyze a fleet’s telematics data for commercial auto insurance or to assess cybersecurity postures for cyber insurance. AI-driven pricing for emerging risks (like climate-related threats) could also gain traction, as models ingest new data sources (IoT sensors, satellite imagery, etc.). Additionally, generative AI could assist in policy servicing – imagine an AI chatbot that can answer brokers’ coverage questions instantly based on policy wordings and past underwriting directives. Many insurers will invest in training their underwriters to work hand-in-hand with AI tools, shifting the skillset toward interpreting AI outputs and focusing on exceptions. We’ll also see continued focus on data quality and governance, as insurers need reliable data to fuel their algorithms. In terms of platforms, expect more interoperability – carrier systems connecting with broker platforms and third-party data via APIs, creating a more seamless flow from submission to quote. Overall, 2025 will further solidify technology’s role in underwriting, with the caveat that the “human touch” remains crucial for final decisions and relationship management.
Insurtech Startups: Role, Funding Trends, and Emerging Models
New Players Find Their Niche: Insurtech startups remained a key force in commercial insurance distribution and innovation during 2024, albeit with a more collaborative approach than in the past. Early insurtechs often aimed to disrupt incumbents, but many newer ones in 2024 focused on enabling or partnering with traditional players. For example, startups like BrokerTech Ventures alum Tarmika (now part of Applied Systems) provided comparative rating platforms for small commercial insurance, helping independent agents quote multiple carriers efficiently. Others like Cowbell Cyber (an MGA focused on cyber insurance for SMEs) grew by working alongside brokers and reinsurers to bring new products to market. These insurtechs filled gaps by addressing specific customer needs or inefficiencies – be it offering faster quotes, coverage for emerging risks, or a better buying experience for busy small business owners.
Funding Landscape in 2024: After the record-breaking insurtech funding of 2021, investment in insurtechs cooled in 2022-2023. In 2024, the funding environment remained cautious but showed signs of stabilization. Global insurtech funding totaled about $4.25 billion in 2024, a seven-year low and a 5.6% drop from 2023. Deal count also declined (~344 deals worldwide, down 18% YoY). However, there were bright spots: early-stage funding actually grew by ~9%, and the average deal size rose, meaning investors concentrated capital into the most promising startups.
Notably, insurtechs with an AI focus attracted strong interest, securing roughly $2.0 billion across 119 deals – nearly half of total funding – as investors bet on AI’s transformative potential in insurance. By segment, property & casualty (P&C) insurtech funding fell (~24% drop), whereas life/health insurtechs saw a boost.
. U.S. insurtechs continued to dominate (about 50% of all deals globally), with the U.K. in second place. In summary, while insurtech funding in 2024 was modest compared to the peak, the market showed maturity: fewer but more substantial deals, and an emphasis on sustainable business models over growth-at-all-costs.
Emerging Models and Collaborations: Insurtechs in 2024 pursued a variety of models in commercial lines. A prevalent approach was the MGA model – many startups acted as managing general agents, leveraging the capacity of carrier partners while owning the customer interface and using tech to differentiate. This let them go to market quickly without full licensing as an insurer. Examples include Vouch (an MGA for startup business insurance) and Coalition (cyber MGA turned full-stack insurer). Another model on the rise was embedded insurance facilitators – startups that specialize in integrating insurance into other companies’ apps/websites. These players (like Cover Genius or Boost Insurance) offered APIs that any brand could use to offer insurance to their business customers, effectively enabling embedded insurance at scale. Additionally, insurtech “unicorns” from a few years ago evolved their strategies: some that started direct-to-consumer or direct-to-SMB pivoted to B2B partnerships. For instance, an insurtech brokerage might now power the small business insurance offering of a bank or payment processor rather than always acquiring customers one by one. Meanwhile, broker-facing insurtech (sometimes called “brokertech”) gained momentum – providing agencies with CRM systems, automation for certificates, or AI-driven lead generation. These tools help traditional distributors compete in the digital age.
The Road Ahead – 2025: Venture investors are cautiously optimistic that insurtech funding will tick up in 2025 if economic conditions improve.
There’s sentiment that as interest rates normalize, capital will flow into promising insurtechs again, especially those leveraging AI or improving efficiency for carriers and brokers.
We may also see more M&A where incumbents acquire insurtech startups: large brokers and carriers are flush with cash from recent strong results and could buy tech-savvy startups to accelerate their own innovation. In fact, some predict insurers will increasingly consider acquiring MGAs to boost growth – bringing specialty portfolios and tech talent in-house. Key areas to watch include cyber insurance startups (as cyber risk remains a top concern), climate risk and parametric insurance innovators, and further development in embedded insurance platforms. Insurtechs that help address insurers’ pain points – like improving underwriting accuracy, distribution reach, or customer experience – are likely to thrive. We can also expect regulatory bodies to keep a close eye on insurtech activities, ensuring that new models (like fully automated underwriting or embedded sales through non-licensed entities) still protect consumers and adhere to insurance laws. Overall, insurtechs will continue to be the innovation engine of insurance, but in a more pragmatic, partnership-oriented way – the era of “disrupt or die” has given way to “collaborate and thrive.”
Embedded Insurance: Integration into Other Industries and Platforms
Embedded insurance is breaking traditional distribution channels – symbolically “shattering” old models – by seamlessly integrating coverage into everyday business transactions.
From Buzzword to Business Model: In 2024, embedded insurance evolved from a buzzword into a tangible growth strategy for many insurers and their partners. By definition, embedded insurance refers to insurance products that can be purchased within the transaction of another product or service.
For commercial insurance, this meant integrating policies into non-insurance business processes. One example is equipment leasing – when a company leases a piece of equipment, the lease platform might offer property or liability insurance for that equipment right in the leasing contract. Another example is retail marketplaces for small businesses (like a craft goods platform) embedding options for the sellers to buy business insurance as they onboard, ensuring they have necessary coverage. This “insurance-as-a-feature” approach gained steam because it offers convenience and context: businesses encounter insurance precisely at the moment when it’s relevant, rather than as a separate, after-the-fact purchase.
Why It’s Growing: Several factors drove the growth of embedded commercial insurance in 2024. Firstly, it provides a way to expand insurance coverage to underserved segments. Many small businesses go uninsured or underinsured due to lack of awareness or time; embedding insurance in platforms they already use (payment processors, e-commerce sites, booking platforms, etc.) puts coverage in front of them when they need it.
It essentially lowers the barrier by simplifying the buying process – often just a few clicks to add insurance. Secondly, embedded insurance can enhance customer experience for the primary product. For instance, a vendor platform that helps a contractor line up jobs might also offer the contractor general liability insurance during signup, solving a key need without the contractor leaving the app. This convenience builds loyalty to both the platform and the insurer behind the scenes. Tech-wise, the proliferation of APIs made it easier in 2024 to integrate insurance offerings; insurers built flexible API-driven products that fintechs, SaaS companies, and retailers could plug into their systems.
In fact, most large insurers now have teams or units dedicated to “partnerships” and ecosystem distribution, reflecting the priority of embedded opportunities.
Notable Developments: Throughout 2024, we saw traditional insurers and startups forging partnerships to enable embedded insurance. Examples:
Brokers and insurtechs teamed up: EPIC Insurance Brokers partnered with Stere to offer a digital suite of embedded insurance products for small businesses via various channels
. This shows even conventional distributors want in on the trend, acting as the insurance backbone for other platforms.
Big tech platforms entered the fray: There were pilots where e-commerce giants and payment providers in the U.S. started offering business insurance from partnered insurers. For instance, some Shopify merchants could get a quote for liability insurance through an embedded link, powered by an insurer or MGA behind scenes.
Multi-line embedding: It’s not just P&C – commercial benefits like group health or disability coverage are being embedded into HR and payroll platforms used by small employers, providing a one-stop shop for businesses setting up operations.
From a market size perspective, the opportunity is massive. Estimates project the embedded insurance market (personal and commercial combined) to grow at ~35% annually over the next five years.
In fact, insurers are increasingly relying on embedded and usage-based products to drive growth and improve customer experience, as traditional channels mature.
Allstate’s success with device protection in retail (after acquiring SquareTrade) is a consumer example cited in 2024, but it underscores how integration into retail ecosystems can yield tens of millions of new customers – a playbook commercial insurers aim to replicate in business domains.
The Future: 2025 and Beyond: Embedded insurance is poised to become even more mainstream in 2025. We anticipate more cross-industry collaborations – think insurance integrated with banking (e.g., small business loans that come with embedded credit insurance), with logistics (freight shipping sites offering cargo insurance by default), and with professional services (a freelancer platform bundling liability insurance into its membership). Insurers will refine their API offerings to be more modular, allowing partners to easily customize coverage terms and pricing to fit their user base. A challenge will be ensuring customers still understand the insurance product and its value, as it’s bundled – so transparency and education must accompany convenience. Regulators might also issue clearer guidelines on embedded insurance sales, to protect consumers/businesses from being automatically enrolled without consent or understanding. Nonetheless, the overall outlook is that embedded insurance will help close the protection gap by reaching customers who previously fell through the cracks of traditional distribution.
For insurers and distributors, it represents a new, efficient route to market. As 2025 unfolds, companies that master embedded insurance – effectively turning insurance from a standalone product into a feature within broader services – will likely capture significant premium growth and set the stage for how insurance is bought in the digital age.
The Takeaway
The commercial insurance distribution landscape that emerged in 2024 is one of both consolidation and diversification. Consolidation – with brokers merging into powerhouses and insurers aligning with key partners – has created bigger platforms capable of investing in innovation. At the same time, diversification of channels – through direct digital sales, embedded insurance, and insurtech-fueled models – is making the market more dynamic and customer-centric than ever. The common thread across all these trends is an emphasis on technology and data to drive efficiency and insight, whether it’s brokers using analytics to advise clients, carriers deploying AI for underwriting, or startups creating seamless digital experiences.
In 2025, we can expect the pace of change to remain high. Brokers will likely leverage their larger scale (from M&A) and tech investments to deliver more value-added services, but must guard against complacency as new distribution entrants nip at niche markets. Large insurers will continue adapting – those who treat brokers, MGAs, and tech firms as strategic allies rather than competitors will extend their reach and relevance. The balance of “high-tech and high-touch” will define success: blending digital tools with human expertise to serve clients better.
For new distribution models, 2025 may be a year of maturation. Direct and embedded channels will capture greater share in the small commercial segment, but they’ll be tested by claims and customer retention challenges, underscoring that insurance is more than just a point-of-sale proposition. Insurtech startups, buoyed by slightly improving funding conditions, will concentrate on practical solutions that complement the industry. We may also see a few breakthrough technologies (perhaps an AI underwriting assistant widely adopted, or a major e-commerce player rolling out a nationwide embedded insurance program) that could quickly become industry standard.
In summary, commercial insurance distribution is reinventing itself – not by replacing the old with the new, but by layering new capabilities on top of trusted foundations. The players who thrive will be those who stay agile: embracing innovation while continuing to fulfill the core promises of insurance. As 2025 unfolds, the industry will be watching how these trends play out, but one thing is clear: the way businesses buy and brokers sell insurance is forever changed, and largely for the better, with more options and better tools than ever before.
