The transformation of the insurance industry evolves in response to shifting environmental and societal needs, alongside accelerated cyber risk insurance and practical AI considerations. Read on!
Earlier trends will now become mainstream, while speed, agility, diversification, and adaptation to ESG, societal shifts, cyber resilience, and practical AI will take center stage.
In 2024, sustainability and ESG were emerging trends, while this year, they will gain more momentum and become mainstream. ESG-focused investment portfolios and climate-specific underwriting are mainstream strategies. Sustainable business coverage and climate resilience products are a growing business driven by compliance and investor commitments.
What’s new for 2025: Compliance, climate-resilient underwriting, and ESG-focused products.
Parametric insurance innovations, i.e., insurance products that pay out benefits based on predefined parameters, were a highlight in 2024 driven by societal changes like “on-demand lifestyle” and gig economies. In 2025, we will see embedded and parametric insurance become more mainstream. Digital innovations will continue to take center stage with demand for real-time and hyper-relevant products.
What’s new for 2025: Hyper-relevant products, and embedded/parametric insurance.
With cyber threats becoming more sophisticated, the focus on underwriting cyber risks continues to grow in 2025 as well. The SME sector will generate demand from a volume perspective, while high-risk businesses will drive demand for tailored products. Usage of AI to understand and analyze cyber risk will be on top of the agenda for insurers, coupled with ecosystem partnerships with cybersecurity firms for end-to-end protection.
What’s new for 2025: AI adoption, cybersecurity ecosystems, and tailored coverages.
Usage of AI to understand and analyze cyber risk will be on top of the agenda for insurers, coupled with ecosystem partnerships with cybersecurity firms for end-to-end protection.
Significant transformation was noticed in 2024 with AI usage in underwriting and claims. Explainable AI, providing clear and understandable explanations of the decision-making processes, will become more important as customers and regulators demand greater transparency. Scalable yet tailored insurance expectations using advanced analytics will drive hyper-personalization. Adaptation of AI is growing exponentially; nevertheless, insurers will increasingly focus on trustworthiness and ethical considerations in AI usage.
What’s new for 2025: The ethical consideration/framework, AI enabling hyper-personalization, transparency, and responsible AI.
Customer experience management and niche markets have been the focus of impact for insurtech startups. 2025 might see some consolidation in this area driven by the needs for funds, market access, and scale. With real-time needs and niches continuing to rise, embedded insurance remains relevant. Incumbents will continue to seek collaboration with innovators and fast movers.
What’s new for 2025: Focus on funding, embedded insurance, and consolidation.
Cloud adoption that started in 2024 continues to accelerate in 2025. Despite challenges for transforming mission-critical parts of legacy, the industry has been down-to-earth pragmatic in finding hybrid ways of moving ahead. Compliance still plays a major role in defining the investments in moderation. All of this means that legacy transformation is more of an operational priority now in the business and IT strategies.
What’s new for 2025: Cloud, hybrid, and compliance.
All of this means that legacy transformation is more of an operational priority now in the business and IT strategies.
Attracting young talent continues to plague the industry. The lack of “sexy” perception hinders in attracting young and ambitious talent. The slow adaptation to technology innovation does not help either. Focusing on automation will attract tech-savvy individuals and help address the talent shortage. Many insurers worldwide are investing in retraining their employees and supporting innovation hubs to bridge the talent and technology gap.
What’s new for 2025: Automation investment, Talent acquisition, and Upskilling.
Ecosystem engagements continue to grow in all lines of business, be it mobility, health, home, or life. Data harvesting and sharing were already very visible in 2024 and will continue to accelerate in 2025 to enable real-time solutions in customer engagement, underwriting, and claims.
What’s new for 2025: Ecosystem acceleration across industries, data sharing, and enablement.
The “wealth transfer to millennials” phenomenon continues from 2024 and certainly impacts life insurance strategies. Gen-Z and millennials will influence the creation of solutions in the insurance space with their set of lifestyle needs and values. Flexibility and ESG-centricity will play a central role and will need to be supported by self-service as well as hybrid services with advisors.
What’s new for 2025: Sustainable investment linked offerings, lifestyle & value mapping, and digital-first approach.
In 2024, geopolitical turbulence and uncertainties were a trend of concern, and it continues to remain the same in 2025. Political challenges, climate crisis, economic challenges, and elections continue to create volatility. Adoption of scenario-based strategies and advanced risk modelling techniques are the need of the hour for insurers. Long-term risk mitigation is possible with diversified and flexible global coverage.
What’s new for 2025: Global and flexible risk coverage, and risk modelling innovations.
Sameer is responsible for insurance and wealth solutions. He actively promotes open ecosystem thinking that powers our WealthMapper and Insurance-in-a-Box platforms. At TietoEVRY, he has a long experience of working within the Healthcare, Insurance and Wealth domains. Prior to this, he worked as a product manager and a brand manager in the food, processing and packaging industry. He is passionate about translating technology innovations to business reality leading to better quality of human life.