Insurance insights: Experts foresee 2025 as the year of the modern insurer

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Dec 04, 2024, 10:08 ET

Emerging technologies and trust predicted to crown carriers amid sector uncertainty, predict industry experts from SAS

CARY, N.C., Dec. 4, 2024 /PRNewswire/ -- As carriers continue to step back from markets at the mercy of climate change, the next generation of insurance professionals will step up to lead the industry forward. 2025 will be the year of the modern insurer, forecast experts from SAS, representing a defining moment when innovation-focused carriers will decisively confront the industry's greatest challenges – and reap the benefits with improved speed, productivity and trustworthy results.

SAS experts predict 2025 will be the year of the modern insurer.

But what defines the modern insurer? While SAS' thought leaders offer differing visions for the year ahead in the wake of the company's recent future of insurance study, #Insurance2040 with Economist Impact, they agreed on one thing. The modern insurer will implement rising technologies to enact an industry disruption: a revival of trust for consumers and regulators alike in an era fraught with risk.

All hail omni policies and the trust comeback
"Insurers need a disruptive, trust-centric rebrand to weather current reputational risk and invest in the continuation of the industry. I predict that, by the end of 2025, a major global carrier will announce plans to introduce 'omni policies.' By purchasing an omni policy, the customer will pay one premium, on one AI-powered policy, that provides coverage in every applicable insurable domain, no matter the risk that individual presents. An all-encompassing blanket of protection, always on tap."

– Franklin Manchester, Principal Global Insurance Advisor, SAS

Insurers and customers put a price on data privacy
"In 2025, insurers will offer a bold new model: 'Data for discounts.' Customers who opt in will share personal information like health metrics, driving habits and spending patterns with carriers, who will fine-tune risk profiles to offer hyper-personalized pricing. For consumers who consent, lower costs await – but costs could climb for the privacy-conscientious. When the choice between data sharing or protecting private data directly impacts coverage affordability, consumers, carriers and regulators will have to decide: can you put a price on privacy?"

– Alena Tsishchanka, EMEA and AP Senior Insurance Practice Leader, SAS

Wearable, shareable health data
"With features like real-time ECG monitoring, stress tracking and sleep analysis, wearable technology can give insurers deeper insights into the health of policyholders, allowing for more accurate predictions. This individualized approach represents a significant departure from traditional methods that rely on static actuarial models and historical data to estimate mortality risk.

"European insurers are already rewarding users of health-focused wearables, and insurers worldwide will follow suit. However, the integration of wearable data will put security and data ethics in focus. The transformative potential of personal data will only be realized if insurers build consumer trust and ensure secure and ethical usage of this most sensitive data."

– Amanda Wise, Principal Product Marketing Manager, SAS

Ecosystem-enabled insurance drives growth
"Insurers will embrace partnering with non-traditional stakeholders to offer tech ecosystem-enabled insurance. For example, carriers will offer homeowners insurance in tandem with smart home companies to offer bundled services. While the industry has historically been resistant to such partnerships, a renewed focus on market penetration and customer retention will make ecosystem enablement a new focus for carriers in the year ahead."

– Andrew Pollard, Insurance Specialist, SAS UK and Ireland

The 'silver tsunami' comes for insurance
"Based on age demographics, the industry can anticipate that roughly half of insurance professionals will retire over the next five years – and an astonishing amount of industry expertise lost. Industry leaders will step up recruitment of their next-generation successors and start looking at how AI and emerging technologies can help bridge the talent gap. These up-and-comers will sharpen their tech skillsets by investing in data fluency and other technical training to differentiate themselves and put their careers on the fast-track."

– James Ruotolo, Senior Director of Financial Services, SAS

Natural disasters advance insurance scarcity
"I foresee that insurers will respond to 2024's catastrophic losses by further limiting availability of homeowner and commercial property products in multiple geographies. They will face reputational risk as the public reacts. Residential and commercial real estate transactions will be sharply depressed due to insurance scarcity."

– Michael "Fitz" Fitzgerald, Insurance Industry Advisor, SAS

Public-private partnerships target the protection gap
"As climate risk becomes more pronounced, we'll see insurance C-suites pursue public-private partnerships for climate adaptation and resilience. Insurers and governments must provide climate coverage for vulnerable communities facing floods, droughts and other natural disasters. Such partnerships will help narrow the global protection gap – currently valued at $1.8 trillion – and ensure that affordable insurance options remain available."

– Oana Avramescu, Insurance Advisory Industry Consultant, SAS

Compliance clarifies AI priorities
"Insurers operating in or interacting with the EU market will need to adapt to the EU AI Act's risk-based classification system in 2025, particularly for high-risk AI systems (like underwriting and claims processing). This will lead to increased investment in AI governance frameworks.

"In the coming year especially, insurers will implement regular AI audits to ensure models are compliant with evolving regulations, focusing on bias reduction, explainability and data governance. Carriers will particularly prioritize explainable AI models for underwriting and claims processing to ensure compliance with transparency mandates.

"This may lead to a slowdown in adopting highly complex models like deep learning for critical decisions, with carriers favoring simpler, interpretable alternatives."

– Prathiba Krishna, AI and Ethics Lead, SAS UK and Ireland

Synthetic data levels up the actuarial pricing process
"Advanced insurers will gain a competitive advantage by leveling up the actuarial pricing process. They'll no longer rely solely on internal data, some of which may contain outdated information. Instead, these insurers' actuaries will increasingly generate synthetic data to augment their existing data sets and integrate external market data. The result? Synthetic data-forward firms will be equipped to deploy faster, more accurate pricing that's more aligned with market sensitivities. They'll increase their profitability – and pull ahead of those further behind in their GenAI journeys."

– Thorsten Hein, Insurance Lead in Risk, Fraud and Compliance Solutions, SAS

Insurers springboard from regulation to revitalization
"Overcoming the fatigue of investing in regulatory solutions, insurance companies of all stripes will shift focus to AI-powered business solutions to help them better serve their customers. Using AI and, by extension, generative AI in insurance will help the industry improve customer engagement and make better decisions in underwriting, policy pricing and fraud detection, just to name a few. AI will also prove the edge property and casualty insurers in particular need to better manage their balance sheets and survive growing impacts of forces like climate change."

– Stu Bradley, Senior Vice President of Risk, Fraud and Compliance Solutions, SAS

Explore the future of AI across industries
Wondering what 2025 will bring in insurance and adjacent industries like banking, the public sector and more? Curious where you fall on the AI optimism spectrum? Visit SAS' technology and AI predictions homepage to take our "predictions barometer" quiz and explore more forecasts and trends.

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