Ahead of The Curve:
2025 Innovation Priorities for Insurance

As we step into 2025, insurers are urgently seeking profitable growth in the face of recent pricing and investment yield volatility, and the lingering effects of the pandemic on claims. The need to optimize the cost of customer acquisition and service has never been more pressing, with several other macroeconomic effects also beginning to impact the industry.

In General Insurance, we see younger customers, particularly Gen Z and Millennials, increasingly want hyper-personalized products that align with their values, while businesses seek insurance that supports not only profit goals but also ESG objectives. Climate Change, Cyber, and Geopolitical risks are exposing the industry to new demands and creating new risk types.

In Life and Pensions, the impacts of aging global populations and shifts in demographic bubbles also affect the Health, Savings, and Retirement sectors.

All these factors are driving insurance companies towards technology, making the following innovation priorities for 2025 of utmost importance and strategic significance.

2. Monetizing Data Assets

The industry has been discussing data monetization for a decade. Brokers, re-insurers, and carriers are all looking to commercialize their data, and insurers are exploring new product offerings to drive competitive advantage. Advancements in technology infrastructure, especially cloud-driven AI capabilities, can now make those discussions a reality. The industry is ready to break down long-standing data silos, enrich data with synthetic and external sources, and harmonize this data into a coherent commercial model for monetization.

Insurers must answer three critical questions: i) How do they create a robust, well-governed data infrastructure, ii) What data products and assets should they produce for internal and external modernization, and iii) What service proposition and operating model is required to deliver these? These are explored further in our article monetizing data.

3. Platform Modernization from Legacy to Modular Cloud Solutions

Few industry players are satisfied with their core policy administration, claims, and even back office platforms. Often hindered by significant technical debt, decades of data model changes, and vendor underinvestment, these platforms are now proving obstructive to the flexibility and agility required for the next generation of products and customer journeys. A high cost to serve represents just one aspect, as change costs become prohibitive to even the most optimistic investment cases.

Insurers facing this challenge are being pushed towards cloud-based solutions either by vendors who want them to migrate to the latest SaaS offering or by end-of-life decisions / technical efficiency, driving a look at re-platforming.

This push for modernization is bolstered by the rise of low-code and no-code platforms, empowering “citizen developers” (staff without deep technical expertise) to refine workflows without overhauling base systems. At the same time, federated IT models enable departments to implement solutions within specified IT guidelines. This approach, coupled with an emphasis on modular, plug-and-play micro-services, is taking hold, and we expect to see this continue across both the Property & Casualty and Life & Pensions sectors in 2025 and beyond.

4. IoT and Insurance 2.0

The next generation of IoT integration is about transforming personal and commercial lines, using sensor data to improve underwriting/pricing by addressing high-value use cases in claims processing. Many early IoT initiatives failed because insurers were trying to sell devices. Today, people and businesses (as well as their vehicles, homes, offices, and factories) are awash with devices. If insurers can access this data, they can use it to inform the claims process and reduce claims indemnity. For example, integrating this data directly into automated fraud checks at the first notice of loss can reduce claims handling costs and enhance early fraud detection. Geospatial technologies can enable early parametric-based claims, reducing the overall cost of a claim before its impact is fully felt, such as in the case of an impending wildfire.

In 2025, we expect Insurers to return to investing in IoT / device integration. Whilst we see the most direct bottom-line impact in claims, we hope that the driver will come from underwriting, as Insurers increasingly look to leverage data to inform risk take-on and pricing decisions.