Adapting Today, Thriving Tomorrow: Key Insurance Insights for 2025
The insurance industry finds itself at an exciting, pivotal moment as we reflect on 2024. Rapid advancements in technology unlocked remarkable innovation and growth, paving the way for insurers to transform their operations and deliver even greater value to their customers. As we enter 2025, three key themes stand out as opportunities shaping the future of insurance, positioning the industry for a dynamic and promising year.
1. Digitalization and Simplification Go Hand-in-Hand
The Opportunity
One of the most pressing goals for insurers today is digitalization. As we explored in our 2024 global report, ‘Re-imagining the Digital Insurance Landscape’, customers and brokers expect seamless, fast, and intuitive digital experiences—whether they’re getting a quote, updating a policy, or making a claim. The ambition is clear: insurers must move processes from the back office to user-friendly apps and dashboards that consumers and brokers can operate anytime, anywhere.
This shift not only enhances customer experience, but it also reduces costs for insurers by automating manual tasks. A streamlined digital operation means fewer errors, faster processing, and significantly improved operational efficiency.
As INSTANDA’s VP of Sales (North America), Geoff Keast called out in INSTANDA’s global report, "You cannot force customers into a channel that they do not want to participate in." Customers must be met where ‘they are’ by insurers, offering them products and experiences that are meaningful to them.
The Challenge
Digitalization isn’t always easy. Insurance, by its very nature, is complex and intricate. If an insurer automates that complexity without simplifying it first, they risk creating systems that are too difficult for their customers and their people to work with.
Insurers must therefore tackle simplification alongside digitalization. Processes need to be intuitive and designed with the customer in mind—after all, the people interacting with these systems are regular brokers and policyholders. They expect clarity, ease of use, and seamless functionality.
This means rethinking how insurance products are built and implementing customer-centric solutions that remove unnecessary layers of complication.
2. From Loss Payers to Risk Partners
The Opportunity
Historically, insurers have operated with a reactive approach— playing a hugely important role in paying out when losses occur. However, as the industry evolves, we are seeing a fundamental shift toward proactive risk mitigation enabled by the Internet of Things (IoTs).
IoT devices such as humidity sensors, water pressure monitors, and wearables offer insurers a way to partner with customers to prevent losses from occurring in the first place.
Take connected home systems and other gadgets, which was very much the topic of conversation in a recent podcast featuring INSTANDA’s Business Development Director, Andy Watts. By embedding IoTs, insurance providers can monitor and mitigate risks such as water leaks, fire, and theft before they cause significant damage. One of our clients exemplifies this forward-thinking approach. Their protection plan includes homeowner insurance, a 10-point smart home kit, and an interactive app that gives customers the tools to prevent risks.
Similarly, data analytics and real-time monitoring systems are game changers for managing catastrophic risks. Another of our clients, for instance, uses more than a thousand data points to evaluate and reduce the risk of floods and wildfires. They are enabling communities to protect their resources and save lives by fusing innovative technology with proactive customer education.
The Challenge
The adoption of IoT and other proactive tools introduces a wealth of new data into the insurance ecosystem. Managing, analyzing, and acting on this "data" requires advanced solutions and expertise. Insurers must develop robust data analytics capabilities to extract value from these insights and optimize their approach to both underwriting and claims. Without these capabilities, they risk being overwhelmed by the sheer volume of available data.
3. Leveraging AI for Transformation
The Opportunity
As we explored in our ‘AI as a Catalyst for Innovation in Insurance’ report, Artificial intelligence (AI) holds immense promise for the insurance industry. While its adoption is in its early stages, AI's potential to transform traditional processes is undeniable.
AI enables insurers to analyze large datasets, identify patterns, and make recommendations that improve decision-making across the board. For example, amongst many things, AI is used to personalize communications, predict customer behaviors, and match products to specific needs.
As a good case in point, Pouch Insurance leveraged the flexibility of the INSTANDA platform and its extensive API capability to integrate a groundbreaking multilingual AI assistant in September 2024, generating an additional 50% quote volume for agents and a significant reduction in customer complaints.
Furthermore, AI paves the way for mass customization—allowing insurers to offer tailored products at scale without dramatically increasing costs, as INSTANDA’s Director for Life and Health, Will Wood, shared in a recent article on Insurance Newsnet. Will predicts that this year, “Insurers will continue to tap into AI to accelerate their claims and underwriting processes, with the end goal of helping customers start their policies faster and access their benefits quicker.”
The Challenge
However, the road to AI integration is not without its challenges. Many insurers operate on rigid complex systems that do not easily accommodate modern, flexible AI solutions. The challenge lies in finding ways to implement AI without overhauling infrastructure entirely.
One option is to adopt a coexistence strategy that allows AI and other technologies (like INSTANDA) to work alongside existing systems. This requires careful planning, experimentation, and a willingness to redefine traditional operating models.
In this scenario, instead of a rip-and-replace strategy, the insurer adopts technologies that coexist with current systems, creating a new ‘innovation layer.’ This layer allows the insurer to experiment, deploy new capabilities quickly, and refine their offerings without interrupting business as usual. Over time, the innovation layer can grow, gradually replacing outdated systems with modern solutions like INSTANDA’s advanced API no-code platform.
This approach not only reduces risk but also offers insurers a way to evolve toward greater flexibility, agility, and customer-centricity.
Making the Right Technology Investment
As our CEO and Co-Founder, Tim Hardcastle, discussed in Issue 67 of Modern Insurance Magazine, “New disruptors have invested heavily in innovative operating models, achieving moderate success. However, success is limited, underscoring the need for a strategic investment approach that works at scale.”
“Technology,” he continues, “could be seen as the easy part of the puzzle. The real challenge is investing in solutions that enhance customer service and solve operational issues cost-efficiently.”
Ideally, technology should cost less than 1% of Gross Written Premium (GWP). However, for insurers dependent on outdated systems, this goal often feels unattainable. To bridge this gap, it’s essential to invest in agile technology solutions that align with an insurer's unit economics. This means adopting a customer-centric approach—understanding what products and experiences customers truly want—and equipping the business with the technology required to meet those expectations cost-effectively.
Innovating for Tomorrow
The insurance industry may face its fair share of challenges, but the opportunities far outweigh the obstacles. By making the right technology investments, insurers can redefine their relationship with customers and gain a significant competitive advantage.
At INSTANDA, we’re proud to work with progressive insurers across the world. Our platform empowers insurers to rapidly enter new markets, quickly iterate on existing business, lower costs, and deliver exceptional customer experiences.
Keen to learn more about our platform and how we are helping carriers and MGAs modernize at pace? Contact us to speak with one of our experts today.
