Insurance Predictions: Seven Things to Look Forward To in 2025

Like most industries, insurance is set to undergo a seismic shift in the wake of new AI, automation, and data-centric technologies. These game-changing tools are rapidly improving, reshaping insurers’ abilities to assess risk, detect fraud, and deliver personalized customer experiences. With 2025 approaching, here are some predictions for the tech-driven trends that insurers can expect to see in the new year.

The Headwinds of Tech-Driven Change

No longer just a buzzword, AI use cases abound in insurance – with its unique ability to optimize workflows, refine and redefine underwriting, and streamline claims processes already proliferating. In the coming year, we can expect fewer insurers to ask, “Should we use AI?” and more to ask, “How should we use AI?”

Prediction One: AI Strategy Becomes a Data Strategy

The initial phase of the past 18 months has been focused on discovery use cases. In 2025, this will switch rapidly from the why? To “how”. Firms will accelerate the unification of the often-disparate data sources. i.e., get the data foundation right!

Prediction Two: Leadership will be digital first

As organizations track the ROI on their GenAI usage, the industry at large will gain a better understanding of the true costs (and savings) brought on by this technology. In turn, certain segments of the industry will experiment with pricing strategies.

AI-driven business strategies will be spearheaded by low-cost digital-first insurers and digital-only brokers. The first to harness the full potential of Generative AI is likely to operate from a lower cost-base and will gain a pricing and service competitive advantage to which the rest of the industry will have to react.

Towards the end of the year, the pricing gap between these services will force a major reaction from the traditional brands.

Prediction Three: Corporate Soul Searching

We will also see an increase in corporate soul-searching efforts to maintain strong human communication with stakeholders, especially if Generative AI takes over many basic communication tasks. For example, just because a company can reduce its workforce with Generative AI-enabled Q&As doesn’t mean it will or should.

As familiarity and experience overcome hesitations, resolution, application, and overall integration will grow, with regulation falling in line. As KPMG’s Mark Longworth, put it: “A robust regulatory framework for AI is needed that’s proportional to the risks. Regulation should not stifle innovation but safeguard usage.”

With regulations and best practices advancing, so too will corporate confidence.

Prediction Four: Personalization & Specialization of Brands

AI has revolutionized the ability of insurers to personalize offerings to their customers. Enhanced self-service will follow, with consumer tasks moving from broker or agent-led interactions towards a digital experience. Insurers will leverage analytics tools to rank and track consumer experiences – digital AI-enabled vs. personal vs. a blend of the two.

With truer customer personalization and improved analysis of huge data-sets, including enhanced customer 360 views and tighter prediction modeling, we could also see changes to desired under-writing footprints and an increase in brands specializing in narrower, more targeted consumer segments rather than catering to broad, generic audiences.

Prediction Five: Fraud First.

AI will continue to be deployed to mass markets with a focus on claims ingestion and fraud assessment. Indeed, traditional fraud assessment processes are in danger of being outpaced and outsmarted by the growing sophistication of large-scale fraud schemes – fraudulent activities remain a significant and widespread challenge for insurers, costing the industry billions each year. With its ability to track patterns and make accurate predictions, AI will be the tool insurers seek to keep fraud at bay. Because fraud is a significant problem with measurable costs and impacts multiple touchpoints across the value chain, investment will begin here.

Prediction Six: Commercial and Commercial Specialty will be a Joy to Work In

The use of Generative AI for summarizing unstructured content at large volumes will be a boon for commercial insurers, leveraging benefits like automated insights, product recommendations, and coverage assessments. This will simplify the process of providing brokers and businesses with the policies they need. When the process of assessing risk and assigning policies for commercial insurance is automated with AI-driven tech, it will free up commercial brokers to focus more on offering better customer service and handling more complex coverage, while spending less (or no time) on the mundane.

Similarly, for often-complex specialty insurance brokers, underwriter workbenches will be bolstered by AI co-pilots that can automate parts of the underwriter process and provide a real-time view of the business in question. By enabling insurers to de-silo and cross-reference historical and real-time data, these tools will help bridge the gap between legacy systems and future needs. In other words, AI can leverage historical data once relegated to legacy systems and reinvigorate it to provide dynamic insights for the future.

Prediction Seven: …We can have a Happy New Year

In 2025, insurers who go the extra mile to make tech a part of their overall strategy will not only gain a competitive edge but also be in the unique position to redefine the role of insurance in consumers’ lives.

Embracing AI, automation, and data-centric technologies is the New Year’s resolution insurers can’t afford to pass over – because for those ready to adapt, the future promises a more agile, innovative, and customer-focused insurance ecosystem.

And an interesting industry to be a part of!

SOURCE: https://insurance-edge.net/2024/12/16/insurance-predictions-seven-things-to-look-forward-to-in-2025/

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