Thriving in a Softening Market: How Commercial Insurers Are Redefining Value

Article by Jonathan Rusby, Director of P&C for EMEA, INSTANDA

For a long time, commercial insurance has been playing catch-up with personal lines when it comes to innovation. But change is here. A new wave of digitalization is creating immense opportunities for insurers to differentiate themselves beyond just price. The next few years will see commercial insurance not simply reach parity with personal lines, but perhaps even leapfrog what we see today.

The global landscape is sending out all the right signals for innovation. Marsh’s Global Insurance Market Index reports that 2025 saw global commercial insurance rates decline by 4% in the third quarter. This marks the fifth consecutive quarter of rate reductions after seven years of increases: a transition driven by heightened insurer competition, an influx of new capacity, and the maturation of digital, data-driven operating models.

The message is clear. With rates softening in some lines, the conversation is shifting from a race to the bottom on price to a race to the top on value. This is reinforced by EY’s 2025 Global Insurance Outlook, which notes that technological advancement, strategic partnerships, and new business models are opening up "more opportunities and incentives for insurers to innovate" than ever before. It’s an exciting time, driven by technology that enables insurers to be more agile, data-driven, and collaborative.

Modernization: Moving Beyond the Sticking Plaster

The challenge of complex systems is a well-known story in the insurance industry. Many large commercial insurers juggle hundreds of disparate platforms, which traditionally stifled innovation and speed. According to EY, this complexity persists, yet the sector is “retooling the enterprise with richer data, modernized technology and refreshed talent,” enabling digital transformation without complete system replacement. In fact, the International Association of Insurance Supervisors (IAIS) finds that over 90% of global gross written premiums are managed within complex but increasingly modernized architectures.

Transformation today is smarter and more incremental. We’re not talking about ripping and replacing everything.

Instead, the focus is on a more balanced strategy:

• Putting something in place that enables insurers to innovate and drive their business forward.

• Avoiding the need to unpick all the existing systems beneath.

This is the panacea for many organizations. Modern systems can coexist with existing infrastructure, unlocking rapid product innovation and integration. Notably, in 2024, IAIS reported that insurers’ assets grew by 3% to reach $42 trillion globally, significantly propelled by investment in digital capabilities and core technology upgrades. This very mindset is not only futureproofing the sector but also attracting digital-native talent who see exciting career prospects in an industry embracing innovation.

The Power of a Connected Ecosystem

One of the most important shifts is the move to modular, API-driven models—with Celent describing 2025 as “transformative” for insurance, as clarity of purpose around technology fuels both efficiency and growth. For years, the term "plug-and-play" has been incorrectly used, but we’re now at a point where it’s a genuine reality. Insurers can seamlessly connect best-in-class solutions to underwriting, risk assessment, and claims, pushing the entire value chain forward.

Data is flowing faster than ever. Insurers leveraging API-driven ecosystems are dramatically reducing manual work, accelerating risk assessment, and realizing time savings across processes. The adoption of API connectivity has enabled underwriters to access real-time risk data and analytics that reframe decision-making timelines from months to minutes.

A prime example of this transformation is Farmsure Insurance Underwriters. By migrating its Farm Combined product to INSTANDA’s platform, Farmsure achieved remarkable results:

• 50% increase in gross written premium within the first eight months of re-platforming.

• Seamless integration with third-party data to enhance underwriter risk assessment (e.g., real-time insights into livestock disease outbreaks).

• Streamlined underwriting empowered by an intuitive self-service portal for brokers to manage renewals, mid-term adjustments, and quotes independently.

This connected approach is breaking down the data silos that have long held the commercial insurers back.

Traditionally, the bordereaux process left underwriters reactive, waiting weeks or months for risk data. Now, data arrives in real time, enabling rapid action and course correction. Perhaps more importantly, this ecosystem feeds actionable intelligence to brokers and partners, broadening distribution and supporting the trend towards more customer-centric, data-enabled offerings.

Unleashing Product and Service Innovation

The ability to innovate with new products is where the real opportunity resides. For too long, commercial insurers have been hamstrung by technology that makes launching or changing a product a long and difficult process.

Modern systems, like INSTANDA, change this completely. They give you the ability to spin up a product, test it, and if it’s not quite right, you can pivot and make tweaks. I’m not overly keen on the phrase "fail fast," but that’s what this is about—the flexibility and agility to respond to evolving customer needs and market changes.

This agility is especially critical in the MGA and coverholder community. The Managing General Agents’ Association (MGAA) Opinion Report published in 2025 flags that commercial customers increasingly demand bespoke solutions delivered fast, and MGAs are stepping up. Distributors able to launch, review and adapt products quickly are pulling ahead. Providing digital portals and modern broker experiences is a true market differentiator.

Take, for instance, Moonrock Drone Insurance, a tech-forward MGA that adopted a modern digital platform and achieved over a 90% reduction in product delivery times and development costs. As a result, Moonrock achieved a staggering 46x increase in gross written premium, underscoring how this level of operational agility directly fuels business growth.

This approach has also been highly effective for another INSTANDA client, a German insurer, which cut product launch time and costs by 90%, facilitating the swift and successful global expansion of its clinical trials insurance to 150 countries.

AI as an Enabler, with a Human in the Loop

There’s a lot of excitement around Agentic AI in insurance, and for good reason. It is beginning to reshape how commercial insurers operate. I say beginning, because the industry is still very much at the embryonic stage with its adoption. As Kevin Gaut, CTO here at INSTANDA, shared in his recent article, the real challenge is not just about deploying AI — it’s about embedding it into the very fabric of an insurer’s processes to create meaningful, scalable value. While many insurers are exploring AI, only a few have truly reimagined their operations to unlock its full potential.

The focus now is on workflows that are composable and deeply embedded; those micro-journeys where AI doesn’t just automate but collaborates. Imagine AI triaging broker submissions, streamlining claims from First Notice of Loss (FNOL) to settlement, or enabling dynamic portfolio repricing. These aren’t just efficiency gains; they’re opportunities to enhance decision-making and deliver faster, more tailored outcomes for clients.

McKinsey’s State of AI in 2025 report highlights this shift. The insurers leading the way are those treating AI as a driver of business transformation, not just a technology upgrade. They’re redesigning workflows from the ground up, ensuring AI works hand-in-hand with human expertise. This “human-in-the-loop” approach isn’t just about managing risk, it’s about building trust and empowering underwriters and product teams to refine, validate, and take ownership of the outcomes.

For commercial insurers, the path forward is clear: start small, focus on high-value use cases, and measure success not just in cost savings but in growth—faster quotes, higher bind ratios, and stronger client relationships.

Closing Thoughts

Ultimately, all these advancements—a dynamic core, streamlined underwriting, and a personalized broker layer—are about one thing: creating value.

By embracing these opportunities, commercial insurers can move into a future defined not by technology constraints, but by innovation, differentiation, and growth. The market is wide open, technology is available, and with a softening market, now is the perfect moment to invest in technology, enhance efficiency, and gain a competitive edge.

Let’s Continue the Conversation

I am always keen to hear how insurers are navigating these market shifts. Whether you want to discuss the trends I’ve highlighted here or see exactly how INSTANDA can help you capitalize on new opportunities, let's talk.