2025 Technology Predictions for Insurance
This article was first published on Insurance Asia News.
Written by David Lynch, Group Chief Technology & Operating Officer, bolttech
Synopsis
David’s technology predictions for 2025 article explores key trends shaping the insurance industry as it moves beyond generative AI experimentation into practical applications. The predictions highlight a shift towards:
- Pairing predictive and generative AI for enhanced customer outcomes
- Leveraging AI as a competitive differentiator in diverse verticals like cyber and health
- Embedding intelligence into products for hyper-personalisation
- Generative AI enabling more access and choice for customers
- Operational efficiencies from AI and advanced automation
- The need for proactive regulatory oversight to address ethical concerns and biases in AI.
- Workforce transformation
- ESG and purpose at forefront
2024 was the year we started to see signs that the insurance industry is rapidly transitioning from experimenting with generative AI to deploying scaled production use cases. Fuelled by new data streams and advancements in IOT, and wearables, predictive capabilities are reaching new heights. However, prediction alone is insufficient to systemically reduce loss ratios; meaningful impact requires proactive interventions such as education, guidance, alerts, and real-time responses based on monitoring and analytics.
The industry is transforming towards a smarter, more personalised risk ecosystem, where AI becomes a foundational capability embedded within intelligent products and processes.
With this as a backdrop, here are eight predictions for 2025 for the insurance industry:
The rise of predictive and generative AI pairing
Amidst the continued hype regarding generative AI, other streams of AI have received less attention. Simply predicting adverse events is no longer enough for the industry to significantly reduce loss ratios. Accordingly, insurers and insurtechs are seeking out ways to combine different streams of AI to deliver vastly improved outcomes and to mitigate risks. The pairing of predictive AI with generative AI is increasing as example, orchestrated by AI agents, is becoming an extremely powerful capability to drive customer experience and to improve protection.
Depth of AI will define industry leaders across protection verticals
While early adoption of generative AI can be a differentiator, staying ahead in 2025 will demand more complex workflows and non-public data to provide a unique experience. Whether it is traditional insurance products like home, auto, pet, life, health, or solving for broader protection needs like cyber and identity, delivery and ecommerce or warranty, traditional product constructs and features such as excesses, waivers, inclusions and pricing – will continue to hold relevance for consumers.
AI, embedded within these products and trained on domain specific datasets and knowledge bases will become increasingly powerful in delivering optimal protection for customers. AI is also becoming a product differentiator for the early movers. Consumers, supported by evolving privacy laws and regulations will also ultimately decide how much personal data they share to access these advancements.
Hyper personalisation through embedded intelligence
We are witnessing a growing trend of original equipment manufacturers (OEMs) integrating embedded AI into their devices and operating systems. Similar advancements are emerging in wearable technology and digital lifestyle and protection solutions. This embedded intelligence enables the development of hyper personalised customer insights, providing tailored coaching, advice and real-time recommendations. With AI’s ability to enhance loss prediction, prevention and recovery, the insurance and protection industry will make significant strides in integrating AI into both traditional and emerging insurance product verticals.
With generative AI, choice matters
When saying choice matters, it is not about deciding on a specific foundational model. It is the availability of choices and having access to wide range of options that matters as the insurance and protection industry addresses the needs of numerous use cases.
Over the past year, we have witnessed a surge of both public and private large language models (LLMs) entering the market, as well as distillation of models to balance considerations such as cost and latency. Even in this early stage of GenAI adoption, the abundance of options makes selecting the right model for each use case significantly easier. The industry can also approach decisions with less apprehension, as switching between models or choosing from within a family of models is becoming increasingly easy.
Internal efficiencies and automation will remain in acute focus
Insurers face the growing pressure to operate more efficiently year after year. These pressures persist even in an industry that typically enjoys favourable margins, especially in years not marked by significant loss events. Nearly every insurer and insurtech is striving to enhance efficiency across the board. From finance, operations, marketing, HR, as well as technology and engineering functions, every facet of the business must adopt AI and advanced automation capabilities to remain competitive. Staying ahead will require pioneering efforts and continuous innovation leveraging these technologies.
Regulatory oversight on AI set to accelerate
As AI adoption accelerates, so will regulatory scrutiny. AI has advanced so rapidly that regulators have the same challenges as insurers in keeping pace. It is evidently clear that perceived customer benefits and risks of sharing and processing data with insurers and third parties, varies significantly based on the product and proposition. Regulators will focus on addressing ethical concerns, biases, and transparency issues. We expect regulators to be proactive in embracing AI and develop frameworks for responsible AI uses, ensuring that insurers balance innovation with consumers’ trusts and compliance.
Workforce transformation accelerates with hyper automation and technology augmentation
The insurance industry is undergoing a generational shift in workforce dynamics. In 2025, automation efforts are poised to accelerate, driven by low or no code tools, agentic AI, generative AI foundations, and democratised access to self-service automation capabilities. Technology teams will play a pivotal role in enabling this transformation.
This era of hyper automation and AI augmentation will bring significant productivity gains over a multi-year period, impacting every aspect of insurance operations. New roles will emerge as AI inference becomes embedded in every enterprise application, products, and functions, prompting the industry to rethink about the skills needed to thrive in this new era. Companies that embrace workforce transformation at a faster pace will enjoy a sustained period of competitive advantage.
ESG and technology will drive the industry to a higher purpose
With ESG influencing every aspect of how business is conducted, industry participants are exploring innovative ways to embed ESG principles in their products and operations. Many organisations have already showcased good practices in key focus areas such reducing carbon emissions, improving supply chain controls, promoting ethical investments, and reducing waste. Technology advancements are making it easier than ever to integrate ESG capabilities into insurance and protection offerings. For instance, products can be carbon neutral, supported by real time data to accurately calculate emission.
Organisations can leverage embedded analytics and real time dashboards to enhance transparency and accountability in sustainability practices. While ChatGPT suggests the purpose of the insurance industry as “to manage risk and provide financial protection against uncertainties”, this perspective is becoming increasingly outdated. The industry’s future lies in achieving a higher purpose – one that extends beyond financial protection to saving lives, improving well-being, and preventing adverse events before they occur.
As the insurance industry continues its journey into 2025, it stands at the crossroads of innovation and purpose. AI and automation are not just tools for efficiency but catalysts for reimagining what insurance can achieve – driving hyper-personalised experiences, better risk management, and operational excellence.
Beyond financial protection, insurance is evolving to improve lives, enhance well-being, and proactively prevent risks. Those who embrace this transformation with agility and foresight will lead the way into a new era of impact and opportunity.