The insurance industry is changing faster than ever before – with technological advancements, generational shifts, and climate change bringing significant challenges. What will insurers need to focus on in 2025 to turn challenges into opportunities and provide the best offerings to their clients?
Collaboration with Startups Will Foster Innovation
To keep up with technological advancements and even stay ahead of them, insurers will increasingly collaborate with startups. Their innovative approaches help create new and modern solutions and products while improving internal processes. Partnerships with various service platforms will also enable insurers to expand their offerings, integrating mobility, and other services into insurance policies.
Adapting to the New Generation and Their Demands
Each year, more of insurers` clients will come from Generation Z and Alpha, who are tech-savvy and critical of any product or service that doesn’t meet their high expectations. Therefore, insurers must constantly improve their customer experience to avoid alienating younger generations. The ability to purchase insurance and file claims digitally with just a few clicks, fast claims payouts, products tailored to lifestyles, and unique bonuses – all of this is no longer a luxury for the new generation, but a basic necessity. The range of insurance services will continue to expand, including options that seemed unimaginable until recently. For example, I am quite sure that soon we will be discussing insurance for virtual environments, such as virtual properties in gaming worlds etc.
Building Trust and Insurance Literacy
According to Balcia survey data, more than half (54%) of insurance policyholders in Latvia have never read their insurance contracts, meaning they may not fully understand their policy terms. Therefore, every responsible insurer must do everything possible to promote insurance literacy. Improving customer understanding of insurance coverage and encouraging careful reading of contracts will help reduce cases where people choose insurance based solely on price, only to find that they are unable to claim because their situation isn’t covered by the policy. A better understanding of how insurance works will also help build overall trust in the insurance industry.
Technology and Artificial Intelligence for Data Analysis
It’s time for artificial intelligence to move from being a trendy concept to a meaningful part of business operations – in 2025, it will become an increasingly important tool for insurers to improve efficiency and customer experience. With advancements in telematics and the Internet of Things (IoT), AI will enable even more personalized insurance products. By analyzing customer data, actions, the surrounding environment, and many seemingly insignificant factors, insurers will be able to offer insurance tailored to the specific client and their risks at an appropriate price. Not to mention AI’s role in processes such as faster claims processing, streamlining administrative tasks, identifying fraudulent activities in a timely manner, and reducing human errors.
However, it is important to remember that alongside the introduction of AI and technology into everyday processes, educating and training employees will play a crucial role to ensure that these new tools are used effectively.
Climate Change Will Shift Insurer Approaches
Recent years have shown more than ever that climate change is not a myth. The impact of these changes is already visible in Latvia, with an increase in the frequency of extreme weather events and the resulting damages. This means that insurers will need to become more flexible, reevaluating risk models and adjusting products accordingly. Demand will also rise for insurance products that cover risks related to various sustainability-promoting technologies and solutions, such as renewable energy systems, electric vehicles, and other technological risks.
Insurers must also evaluate their internal impact on the environment and society and seek ways to make it more eco-friendly. To successfully implement sustainability principles, they must become a part of the company's overall strategy. It is important to explain the significance of sustainability to employees and involve them in setting and achieving sustainability goals. It’s essential that there is consensus within the company on how different processes can contribute to a more sustainable future.
Technology is evolving, AI is moving from a trend to a meaningful assistant, the new generation is challenging traditional standards, and sustainability is becoming a key part of strategy. The real question is: will insurers seize these opportunities and stay ahead? In 2025, success will belong to those who do.
