The insurance industry in 2025 is at a pivotal point, with key digital insurance trends leading the charge in transforming how carriers operate and interact with customers. Carriers must innovate, adapt to these changes, and leverage new technologies to maintain a competitive edge.
Insurance Trend #1: Building Business Resilience
Underwriting actions in response to increased claim frequency and severity are expected to stabilize combined ratios across most property and casualty insurance lines in 2025. At the end of 2024, Moody’s changed its insurance outlook to “stable,” citing their belief in the adequacy of rate increases to cover forecast claims cost. However, these higher rates are having noticeable impacts on consumers. 2024 closed with record-high average auto premiums which were up 26% from 2023. Customers are reacting by shopping insurance providers.
Recommended Approach: To buffer these external pressures, carriers and intermediaries must focus on operational efficiency, which can be accelerated through technology. Modernizing infrastructure and investing in intelligent automation and AI are crucial. Technology alone won’t solve all issues; carriers must ensure transparent, effortless, and personal interactions with producers and consumers across the value chain.
You May Enjoy: Manage Rising Expenses in Insurance
Insurance Trend #2: Digital Distribution Across the Value Chain
In 2025, carriers will continue to innovate with new tools and services to interact with customers and producers as roles, sales channels, and client relationships evolve. Carriers must digitize their operations, incorporating modern technology and data to automate and enhance the value chain experience, allowing consumers and producers to mitigate risk confidently.
Recommended Approach: Evolving distribution necessitates innovations such as embedded insurance to enhance brand awareness for producers and digital-direct consumers, offering convenience, transparency, and choice. Agencies will continue to play a critical role in navigating difficult underwriting conditions by tailoring policy coverages and providing transparency, which requires that they have access to modern sales and servicing tools. Adopting these strategies supports an intuitive, experience-driven buying process for both agents and direct customers.
Related: 3 Key Insurance Takeaways From InsureTech Connect 2024
Insurance Trend #3: Enhanced Customer Experience
Underwriting actions to restore profitability have negatively impacted industry perceptions and experiences. Tighter underwriting tolerance and rate increases have challenged producers and financially burdened consumers. Industry experiences have lagged due to outdated technologies, product-centric processes, and lack of transparency. Consumers prioritize customer experience in their purchase decisions, and producers favor carriers offering ease of use and flexibility on modern platforms.
Recommended Approach: Successful carriers leverage operational data to create actionable insights across a connected digital ecosystem, delivering integrated, seamless, tailored experiences. This approach goes beyond traditional omni-channel engagement, incorporating evolving technologies like social media, chatbots, and IoT, while respecting customer preferences and privacy. Omni-channel engagement offers smarter business decisions, real-time system access, and meaningful connections at every touchpoint.
Success In Action: Proving Rapid Value and Creating Better Member Experiences
Insurance Trend #4: AI Disruption and Enablement
AI and ML promise to enhance decision-making, servicing, and settlement processes in the insurance industry. AI won’t replace humans but will offer efficiencies that free up human mindshare, supporting the industry’s noble purpose of safeguarding futures amidst disruption.
Recommended Approach: AI, when applied to claims, underwriting, and customer engagement, creates a market advantage. We help clients advance AI capabilities through virtual assistants, generative interfaces, agentic frameworks, and product development, enhancing team velocity by integrating AI team members.
Explore More: Transform Your Business With Cutting-Edge AI and Automation Solutions
Insurance Trend #5: Data-Driven Risk Assessment
The pace of change in the industry will continue to accelerate, with social inflation, weather, and economic inflation pressuring carrier loss ratios. Emerging risks like cyber threats create opportunities for new products but bring volatility that traditional risk models can’t predict.
Recommended Approach: The digital era introduces capabilities like personalization, AI, and document digitization. A strong data fabric becomes critical to enabling the trust and availability needed to support foundational and transformative opportunities and turn data into useful organizational information. Many insurance companies are data-rich but intelligence-poor, limiting their ability to identify and mitigate emerging risks. Prioritizing predictive modeling and data analytics is crucial to staying ahead of the competition.
Related: Data-Driven Companies Move Faster and Smarter
Next Steps: 2025 and Beyond
Carriers and brokers count on us to help modernize, innovate, and win in an increasingly competitive marketplace. Our solutions power personalized omnichannel experiences and optimize performance across the enterprise.
- Business Transformation: Activate strategy and innovation within the insurance ecosystem.
- Modernization: Optimize technology to boost agility and efficiency across the value chain.
- Data + Analytics: Power insights and accelerate underwriting and claims decision-making.
- Customer Experience: Ease and personalize experiences for policyholders and producers.
We are trusted by leading technology partners and consistently mentioned by analysts. Discover why we have been trusted by 13 of the 20 largest P&C firms and 11 of the 20 largest annuity carriers. Explore our insurance expertise and contact us to learn more.
