Study polls insurers on strategies, investments for 2025

Profitability will be the biggest top-of-mind issue for insurers in 2025, while advanced data and analytic technologies will be insurers’ top strategic priority this year.

Majesco polled insurers on their strategies and investments for 2025 and presented the results of that study in a recent webinar.

“We must rethink the business operating model that we’ve had for decades and create a new modern era of insurance,” said Denise Garth, Majesco chief strategy officer. “The way business is done needs to leverage the technology, needs to understand a different set of customer expectations, needs to understand a different level of talent that we must bring into our organization, and leverage that technology so it enables them to do things more quickly and provide it in a quality manner.”

Insurers’ optimism index is trending upward, she said. An increasing percentage of insurers reported they plan to introduce new products, develop new business models and focus on innovation.

Carriers are increasing their spending and reallocating resources to remain competitive at a higher rate than they have over the past four years, said Glenn Westlake, Majesco vice president of strategic marketing. For example, 69% of insurers surveyed said they expect to increase their information technology budgets for 2025.

Insurers eye new products

Insurers also reported they plan to develop new products and new business models for existing markets as well as new markets in 2025, he said.

Enhancing existing “traditional” insurance products and developing new ones are the top two areas insurers said they are working on this year. But companies are looking at developing more worksite and individual products, Westlake noted.

Insurers’ product focus for 2025 reflects heightened awareness of new risks, shifting market conditions and customer needs to close protection gaps, he said.

Digital solutions are focus in 2025

Digital payments is another area of insurer focus in 2025. Westlake said. More insurers are accepting payments through their own app or digital wallets.

Artificial intelligence is becoming more accepted by insurance carriers, the study showed, but consumers have been slow to use these tools. Westlake said only 20% of consumers with basic AI experience said they have used AI with their insurer. But those consumers who have used AI were happy with it, with 88% of Generation Z and millennials and 67% of Generation X and baby boomers saying they were satisfied with the AI experience.

Garth said insurers must develop an action plan to invest in the future instead of putting resources into systems that no longer work. That action plan includes answering the following questions:

• Assess how your strategies and priorities compare to others in the industry. Are you a leader, a follower or a laggard?
• Does your technology and operating model provide a foundation to adapt, innovate and deliver at speed as markets shift, risk changes and the pace of change continues?
• Are your investments defensive or offensive in nature?
• Are you making investments to survive or to achieve growth and scalability?
• What do you need to adjust?
• Can you keep up with the pace of change?

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].