As the insurance industry grapples with the dual challenges of climate change and evolving consumer demands, 2025 is poised to be a transformative year. Experts from SAS, a global leader in data and AI, have dubbed 2025 “the year of the modern insurer.” Their insights, drawn from the recent #Insurance2040 study conducted with Economist Impact, outline how insurers can redefine themselves through innovation, technology, and a renewed focus on trust.
SAS envisions the modern insurer as one that leverages emerging technologies to address key challenges while fostering consumer and regulatory trust. This shift will redefine the industry, emphasizing speed, productivity, and transparent results.
Introduction of ‘Omni Policies’: A groundbreaking shift in insurance offerings is on the horizon. Experts predict the debut of “omni policies,” where customers pay a single premium for AI-powered, comprehensive coverage across all insurable domains. This innovation promises simplicity and broad protection.
Data for Discounts: Insurers may offer lower premiums to customers willing to share personal data, such as health metrics or spending habits, enabling hyper-personalized pricing. However, this raises questions about the cost of privacy for those opting out.
Wearable Technology: Health-focused wearables like ECG monitors and stress trackers are becoming integral to policyholder risk assessment. This personalized approach highlights the need for ethical data usage and consumer trust.
Tech Ecosystems: Partnerships with non-traditional stakeholders, such as smart home companies, will expand. Bundling insurance with tech services could increase market penetration and customer loyalty.
Talent Shortages: The “silver tsunami” of retirements will create a skills gap, pushing insurers to adopt AI tools and recruit tech-savvy talent.
Climate Risks: Natural disasters are prompting insurers to limit homeowner and commercial property coverage in high-risk areas, impacting real estate transactions. Public-private partnerships will be critical in addressing the $1.8 trillion global protection gap.
AI and Compliance: With regulations like the EU AI Act looming, insurers will prioritize ethical AI use, ensuring transparency and bias-free algorithms in underwriting and claims.
Synthetic Data for Pricing: Advanced insurers will integrate synthetic data into their pricing models, delivering more accurate, market-sensitive pricing and gaining a competitive edge.
AI will play a pivotal role in modernizing the industry. From underwriting and fraud detection to policy pricing, AI solutions will help insurers adapt to challenges like climate change while enhancing customer experiences.
2025 will test the resilience and adaptability of the insurance industry. By embracing innovation, fostering trust, and addressing emerging challenges, insurers can redefine their role in a world marked by uncertainty. For carriers ready to modernize, the year offers opportunities for growth, efficiency, and revitalization.
See SAS’ technology and AI predictions homepage for further insights into the future of insurance and beyond.