Panel: AI alone won’t be enough to carry insurtechs in 2025

Meaningful innovation, more so than strictly generative artificial intelligence, is needed to drive insurtech business and development in 2025, according to a panel of experts on a recent Majesco webinar.

Panelists discussed future trends and projections for the American insurtech landscape, noting that AI will necessarily play a major role. However, they emphasized that innovation will have to stretch beyond just a surface-level to demonstrate solid value for stakeholders and encourage investment.

“I see no slowing down of innovation. I feel like there’s a shift, though, to more thoughtfulness, a little bit more seriousness. There’s definitely a change in tone, and I think it’s a good correction,” Megan Kuczynski, senior strategic advisor, Insurtech Insights, said.

“You know, the technology itself is not what makes the difference. It’s the support of a very, very clearly defined business mandate. Ultimately, it comes down to the leadership team, and the insurtechs that have been most successful are those that have extremely strong, well-understanding, very empathetic leadership teams,” Andrew Johnston, global head of insurtech, Gallagher Re (USA), said.

Ubiquitous technology

Johnston said the last decade of insurtech has proven there is a “huge appetite” for innovation in the industry. In his view, the biggest benefit to emerge from this has been the pervasiveness of technology.

“Technology, as a line item, is in basically every single insurance company on earth now, in a way that it probably wasn’t 10 years ago,” he said. “The fact that, with such open arms, we have welcomed technology companies, invested in them and put our money where our mouths are, is indicative of us wanting to be cutting edge.”

This trend is expected to continue. However, panelists cautioned that innovation must be meaningful and well-thought-out to have an impact and demonstrate ROI.

“Sometimes, no strategy is better than a bad strategy. I think what I’m really excited about with this second wave of insurtech is that innovation is less fixated on individual technologies or technology buzz wordery and more back to basics,” he said.

AI and big data

Johnston described AI as “both part of the problem and part of the solution” for insurtechs looking to get ahead in 2025. He said one of the potential pitfalls of AI is a tendency to “hyperfixate on individual price and products using AI.”

However, he said AI could play a more effective role in use cases such as:

• Pattern recognition
• Fraud detection
• Predictive analysis
• Forecasting clear changes in climate events
• Improving operational efficiencies

Fellow panelist David Gritz, co-founder, InsurTech NY, also underscored the importance of high-quality data in creating a competitive advantage. He suggested finding access to third-party data sources within the business’ niche will be key for democratization.

“I think AI will be a supporter of a business hypothesis rather than in and of itself being the savior of all this,” Johnston said.

Beyond AI: Management and operations

Panelists emphasized that innovation should also apply to rethinking operational models and business processes.

“Discipline of project management is going to have to shift from IT to the business, and we’re going to have to be better, overall, as project managers. I see this increasing over time and, hopefully, that will be led by the people who have that expertise in IT. That’s what kind of bridges the divide between IT and the business,” Gritz said.

“I think one of the fundamental shifts that we’ve seen is that there’s been this evolution away from technology being the sort of product focus and actually a prioritization around the business demands,” Johnston added.

Coverage gap opportunities

Coverage gaps in P&C and L&H driven by increased premiums, significant climate risks, carriers leaving markets and other factors will give insurtechs a “great opportunity for innovation and disruption,” according to the experts.

But they noted this will depend on industry-wide buy-in and partnership or support from other sectors and regulators.

“That is an area that I think may need more than just the industry, almost kind of like social pressure, governmental pressure to help support backstop if we want it to really help the economy,” Gritz said.

Investments shifting

A favorable investment landscape is expected to create an “incredible opportunity for insurtechs to kind of seek out the right kind of capital that is sympathetic, patient and understands that this is not a bubble and the returns on this are going to take time,” Johnston believes.

The environment is ripe for an uptick in consolidation and acquisition activity, panelists noted, especially as valuations have come down, technology is “less bamboozling” and insurers know what they’re looking for.

“My big ball prediction is that we’re going to have much more of a focus on the business strategies and the business priorities that are going to really differentiate for insurers and brokers and reinsurers in the market to be able to do profitable growth. That’s where the investments are going to be,” Denise Garth, chief strategy officer, Majesco, said.

Majesco is an insurance software and technology company founded in 1982 and based out of New Jersey.

Gallagher Re is a global reinsurance brokerage firm founded in 1927 and based out of London. It operates in more than 30 countries, including the United States.

Insurtech Insights is a global organization providing resources, education and support for insurtechs, insurers and investors. It was founded in 2018 and based out of London.

InsurTech NY is a resource website dedicated to providing support for American insurtech communities. It was founded in 2019 and is based out of New York.

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