Insurers have lowered their expectations for US property and casualty (P&C) premium growth next year following Donald Trump’s election, according to a report by EY.

Munich Re predicts premium growth in the North American P&C market will drop from about 4% last year to about 1.5% next year.

Some analysts believe the President-elect’s promised tax cuts and increased infrastructure spending will lift growth and drive up interest rates, while others, such as the Bank of America, think his policies will do the opposite.

Persistent low interest rates have resulted in insurers’ net investment income dropping from $US31.6 billion ($42.43 billion) in the first half of last year to $US26.5 billion ($35.58 billion) in the first half of this year – a 16% decline.

EY says portfolio yields are at record lows and lagging investment income will continue to stymie bottom-line growth in the P&C sector for the foreseeable future.

In response to low bond yields, insurers will continue seeking higher-yielding investment opportunities that may be high-risk, and with investment income likely to remain weak insurers should focus on underwriting profits, it says.

The report predicts innovation will “speed up” next year, with more than 1000 insurtech start-ups in operation and many P&C companies partnering with these, or working on their own programs.

Insurtech Trov, which lets users buy cover instantly via their smartphones, shows how innovative products can disrupt the P&C model, it says.

Next year insurers will increase the use of robotics and advanced analytics, and more agile insurers will embrace artificial intelligence, the Internet of Things, telematics and blockchain to improve customer experience.

They will also look to new business models such as pay-as-you-go pricing and peer-to-peer insurance, EY says.

To navigate this shifting market, insurers must focus on customer-driven innovation, use technology to lift top and bottom-line performance, put cyber risk high on the corporate agenda and rethink strategies to attract, develop and retain talent.