As the insurance industry navigates a rapidly evolving landscape, Fadata looks ahead to 2025 and highlights the key developments and trends in insurance and digital transformation. Entries are now open for the 2025 AI Awards. Check out all the award categories here.
Based on the close collaborations between Fadata and its clients, the major trends that Fadata predicts will shape the future of insurance are Internalization, Prevention, Cloud Migration, Embedded Insurance, Ecosystem Development and Talent Transformation. These six trends are driving transformative changes across the sector, with insurers adopting innovative approaches to address customer needs, operational efficiency, security, risk, and market demands:
Bring it in: Internalisation of processes
In 2025, insurers are increasingly expected to internalise key operations. Insurers are looking to streamline operations, reduce costs, and boost data security, all of which can be achieved by the enhanced control of processes that internalisation affords. Insurers can also achieve greater agility in responding to regulatory changes, market shifts, and customer demands by taking control. Shifting to SaaS models, insurers are also able to work directly with out-of-the-box software providers that can support them through implementation and beyond. Already, Fadata is supporting this shift, working with customers to build efficient internal Centres of Excellence for critical business processes, providing training and assisting with setup to enable them to insource their business’s critical knowledge and become self-sufficient. This trend reflects a growing emphasis on efficiency and customization to support customer-centric insurance.
Prevention First: Prevention-Driven Insurance Models
Proactive risk prevention is becoming a cornerstone of the insurance industry. By aligning incentives focusing on customer safety and financial well-being, prevention-driven insurance models can reduce claim frequency and create opportunities for insurers to engage with policyholders in more meaningful ways. By emphasizing prevention in 2025, insurers will not only lower costs, but will improve customer satisfaction, fostering loyalty by supporting them in maintaining their health, safety, and assets. The frequent environmental catastrophes are an example where the insurer can proactively play a role to avoid being impacted severely.
Fadata expects more insurers to adopt technology that enables them to leverage the data required to deliver prevention-driven insurance. Accessing data is of course key; from IoT devices in health, life and building insurance, aerial imaging in building and disaster insurance, and telematic tracking devices for auto insurance, to AI, ML and blockchain for fraud detection, risk assessment and predictive tools. Insurers can access a wealth of data that will help customers avoid claims through early alerts and preventive support, which also enables lower premiums for customers.
Time for migration: To the Cloud
Cloud-based solutions are making digital transformation more cost-effective and serve as the most effective host to make the best use of digital tools, supporting more seamless integration of third-party technologies.
- Flexibility & scalability: Increasingly, the flexibility and scalability in the Cloud are appealing to agile insurance companies that recognise the need to adapt quickly to market changes and the value in responsiveness for modern insurance, which is set to continue in 2025. As insurers consider the cost of digital transformation, Cloud solutions become increasingly attractive as they reduce infrastructure costs. They can also reduce hardware investment through more efficient scaling up and down, for example in the event of natural disasters when scaling up quickly to handle large amounts of claims is essential.
- Security: Cloud solutions also offer a level of security that can otherwise be costly to achieve and maintain for insurers. They offer robust, heavily invested security measures, already in place, and regular security updates applied with ease and speed as threats change. In 2025, with the rising threat of cyber-criminal activity, more insurers will be looking to foster a culture of security awareness, and the Cloud will be a top consideration.
Distribution shift: Embedded Insurance
Embedded insurance is increasing in relevance. Customers are seeking more value during their purchasing journeys, businesses are looking to satisfy these customers and generate new revenue streams, and insurers want to reach untapped customer segments – this leads to a need for embedded insurance. Making insurance more integrated, accessible, and customer-centric, this significant shift in insurance distribution is becoming a major catalyst for transforming the insurance landscape. Thanks to APIs and core platforms, the integration of insurance into digital platforms is made easy. While more readily available real-time data with advanced processing is enabling businesses to offer their hyper-personalised insurance offers.
Already typical with travel, product and e-commerce, broader adoption of embedded insurance is expected in 2025. With sectors such as real estate and healthcare, expected to. offer contextually relevant insurance coverage seamlessly integrated into the transactions or usage experience of their goods and services.
The rise of digital platforms: Ecosystems
The main drivers for leveraging digital ecosystem models in 2025 are improving customer engagement and broadening market reach. Customer experience has become critical to insurance business success and the ecosystem model enables the means to add value, deliver a slicker user experience, and create more personalised products and communications. Through strategic partnerships, platform ecosystems are fostering innovation, bridging the gap between technology experts and InsurTechs to make adoption easier to apply and manage, with integrations made seamlessly and terms often pre-approved for simplicity. This collaborative approach allows insurers to diversify and stay relevant in an increasingly competitive market. How insurers and developers embrace the ecosystem movement, the benefits for insurers, their customers and the industry, and what to consider when selecting an ecosystem, are the most prominent considerations.
Fishing the talent pool: Developer transformation
As the industry embraces Artificial Intelligence, data analytics, and automation, there is a rising need for talent skilled in data science, cyber risk, and technology integration. Notoriously glamourless, insurance to date has been a tech-driven industry with less appeal for developers than other industries. However, the demands of digital transformation, including AI, data analytics, and automation, are attracting fresh developer talent. Gen-z in particular wants to work with cutting-edge tools, platforms and technologies; legacy systems and outdated programming languages do not factor in their career path. Now, developers skilled in data science, cyber risk, and technology integration are relishing the challenges insurance evolution is presenting, excited to experiment with new ideas, and creating a future-ready talent pool of innovative thinkers and problem-solvers that will ensure insurers stay competitive. These developers are recognising the opportunity to disrupt traditional software models and be part of a fast-growing sector, and 2025 will see a large catch from the talent pool for insurance.
Fadata has over 30 years of experience working with insurance companies all over the world, identifying exactly what the industry needs to be efficient in daily business and to successfully progress. Fadata’s extensive knowledge translates into a leading platform, where the insurance back office is fully automated and ready to be integrated and tailored to clients’ needs in a predefined process to control investment.
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