Diving into 2025 and the future of Insurtech
Introduction
The insurance industry is going through a transformational change, and the change has seen an acceleration since Covid-19. All of a sudden, the industry caught off-guard like others, realized the need to move everything online and embrace technology to serve customers. The need to reinvent and quickly adapt to the new normal became essential to stay relevant.
Over the last 5 years, we’ve seen digitization take many shapes and forms with respect to the insurance industry, with many of the processes including underwriting, onboarding, customer lifecycle management, and claims settlement. We’ve seen in the last year or two AI taking centre stage and being used for underwriting, while blockchain technologies are driving claims processing. All of these new technologies are being brought in with the purpose of making processes more efficient, operations smoother, and improving overall customer experience across digital touchpoints.
Insurtech, which is the confluence of insurance and technology, is seeing rapid growth, and we are likely to see many areas in 2025 that are likely to see transformation.
Artificial Intelligence and Machine Learning
Underwriting: We are likely to see increased adoption of AI in underwriting, especially in areas including evaluating exhaustive data sets, social media screening, IoT data, and telematics. AI in underwriting will mainly help in improving risk assessment while improving overall turnaround time.
Chatbots and Virtual Assistants: The adoption of chatbots and VAs is likely to see an increase in 2025. We are likely to see them transforming customer experience by offering round-the-clock support. This will directly impact customer signups, fasten claims processing, and improve overall customer experience.
Fraud Detection: AI, like any other industry, will see more adoption in insurance to recognize patterns and data anomalies to help insurers identify and curb fraud. As insurers globally focus on increasing profitability, we are likely to see increased focus on fraud detection and reducing occurrences.
Internet of Things (IoT) and Telematics:
Usage-Based Insurance: With IoT, devices are able to monitor certain behaviors like speed, travel time, and other parameters related to usage of vehicles. This information is used to calculate premiums and decide on risk profiles of customers. We are likely to see UBIs see increased adoption in the coming days as they will become a differentiator for insurers to attract customers.
SmarDevices: CCTV cameras, smoke detectors, and motion detectors are increasingly being used to again decide on customer premiums, offer discounts or reward points, and improve overall risk assessment. Now what is to be seen is the privacy breach that this might encourage and the laws around data privacy that will come in place.
Blockchain Technology:
Claims Processing: With blockchain being known for transparency, claims processing as an area will see increased adoption of blockchain, making the entire process more transparent and less prone to fraud.
Smart Contracts: This is likely to automate many processes that will help reduce manual interventions and improve overall turnaround times.
Embedded Insurance: Open finance helps insurance players integrate their products with other marketplaces, e-commerce, and other service-based platforms, increasing purchases. For example, an airline ticket booking platform offering life insurance before a customer checkout.
Cybersecurity:
Insurance as a field has sensitive data pertaining to various facets of customers and needs to be safeguarded at all times. We are likely to see more focus coming into areas including data privacy and governance and stricter ways through which data can be safeguarded.
Cloud Computing:
Cloud computing offers many benefits for businesses that need to scale quickly and deploy products and services across geographies. With cloud platforms, real-time analytics and data-driven decision-making get fostered. Cloud also offers flexible cost optimizations for organizations wanting to save on costs while enjoying the benefits of scalability. We are likely to see greater cloud adoption by insurance players in 2025.
Compliance:
The regulatory governance regarding insurance companies and their engagement with customers is likely to see changes in the years to come. Insurance players will be required to strictly comply with local regulations, and this will see increased adoption of products in the risk and compliance space.
The Legacy Bottleneck:
Many insurance players are stuck with legacy systems hampering growth and innovation. 2025 is likely to see insurance players adopting more solutions that do not necessarily require them to rip and replace legacy systems but that help build digital layers above it. This acts as an extension to the existing systems and builds further capabilities.
Conclusion
2025 will be a year of opportunities and challenges for the insurance domain, and insurance players need to see how effectively navigating the year and focusing on building trust with customers and showcasing long-term value will be key in succeeding. At Profinch, we’ve been working with insurance companies and helping them address their priorities, bring in efficiencies, and help them adapt and grow faster.
Speak to us to understand how our consulting solutions and products are shaping the future of insurance.