Engaging with insurers: A look back – and ahead

As we move through 2025, it's a good moment to reflect on how pension schemes are engaging with insurers – how this process has evolved, and what may lie ahead. 

A look back

Three years ago, the pensions landscape looked quite different. Long-term interest rates were still below 1%, many schemes were grappling with buyout deficits, and demand for insurance-based solutions was already running high. Annual volumes of business typically fell between £25bn and £30bn, driven largely by larger, well-funded schemes and transactions often supported by material contributions from sponsoring employers.

At that time, pension schemes frequently had access to quotes from several of the eight insurers then active in the market. Around 150 transactions were completed annually, with approximately half of these involving liabilities under £50m. A process based on ‘exclusive’ engagement with a single insurer was rare.

The current picture

As demand exploded following the UK Government’s ‘mini-budget’ on 23 September 2022, the volume of activity has only increased. 226 transactions were completed in 2023 and 2024 further exceeded this record with 294 transactions.

This surge in demand led insurers to be more selective about the cases they take on. In many instances during 2023, insurers would only quote on the basis of exclusive engagement, even for transactions approaching £500m. 

Of the 294 transaction completed in 2024, roughly 70% fell under the £50m mark. Many of these likely proceeded on an exclusive basis, due to insurers being more discerning amid a wealth of opportunity. In these cases, advisers have played a crucial role in determining whether a quote offers fair value, based on the specific circumstances of each scheme.

Looking ahead

There are clear signs that insurer appetite for competitive engagement is returning – especially for schemes with liabilities above £20m. A number of factors are driving this shift: increased staffing within insurers, more efficient internal processes, and the entrance of new providers – pushing the number of active insurers into double figures.

We expect this momentum to continue. As insurers expand their post-transaction capabilities and streamline their pricing operations further, we anticipate the appetite for competitive engagement to continue - even in the smaller end of the market. Insurers who request an ‘exclusive' process will need to clearly differentiate their propositions to retain and gain market share.

Throughout the rest of 2025, we anticipate greater scrutiny of how schemes engage with insurers. For smaller schemes, a competitive process may only be viable if it's limited to a capped number of providers and follows a single, efficient pricing round.

Trustees and sponsors will need to be deliberate in choosing which insurers to engage. This will involve setting clear objectives and agreeing what a successful outcome looks like with advisers playing a key role not only in shaping initial strategy but also in adapting it as the market continues to evolve.