How AI and tech will impact insurers in 2025

By Chaz Perera

It has been another interesting year for insurers. Profitability across U.S. property/casualty insurers improved in 2024, mainly driven by substantive rate increases and tighter risk appetite. What didn’t change from the prior year? The ongoing talent crisis across the industry, where the team member turnover rates averaged 13.5%, with voluntary turnover above that average.

A few key trends and developments are expected to define the insurance industry's future. Let’s examine how they will impact business models, customer experiences and employee satisfaction and loyalty.

Here are five predictions for the new year:

Insurers' key to success in 2025 is operational effectiveness. Pricing will no longer be a differentiator in 2025. To increase margins while keeping costs down, insurers will focus on bolstering productivity while offering customization for better client service across their claims and underwriting departments.
The insurance industry will lean on robust upskilling platforms to counteract the increasingly aging workforce. Companies will intensify efforts to close the skills gap. Initiatives will leverage artificial intelligence and digital tools to provide adaptive training and operational resources tailored to modern needs. Successful players will combine these technologies with flexible work arrangements to align with shifting employee expectations. This dual approach will drive competitiveness by balancing workforce transformation with effective talent retention strategies.
AI will disrupt the traditional insurance outsourcing model by automating routine tasks that were typically offshored, cutting outsourcing jobs in half in the next three years. Intelligent workflow agents will dramatically change work design. Dynamically distributing work based on real-time capacity, expertise and improved process orchestration will reduce outsourcing costs. AI systems will manage document processing, data entry and basic customer service - traditionally handled by business process outsourcing providers - by shifting the focus from outsourcing to specialized services such as AI model training and complex technical support. AI training will occur in the U.S., not at offshore locations.
Next year will mark the rise of a trainable agentic platform in insurance that will push towards parity of onboarding for digital and human workers. This platform will include training materials and standard operating procedures that can be ingested and leveraged. The technology winners in this space will provide guardrails for agentic AI that operates with limited human intervention and scales easily.
First-mover technology advantage will unlock a $1 trillion global insurance opportunity. The underinsured coverage gap, estimated to be a trillion-dollar opportunity, represents a prime area for innovation in 2025. Technological advancements will drive this transformation, allowing us to quickly meet shifting consumer expectations and respond to evolving risk landscapes. Insurers can tap into this vast market and secure the reward by developing AI-driven innovative products, leveraging data analytics and building strong customer relationships.

The historically slow-to-modernize insurance industry is undergoing significant transformation, driven by emerging technologies, shifting consumer expectations, and evolving business and regulatory landscapes. As we look ahead, next year will bring opportunities for insurers, brokers and policyholders alike. This includes insurance businesses driving new levels of productivity while maximizing their human resources through the use of AI—enabling insurance executives to anticipate and respond to business pressures. It will be exciting to watch what’s to come.