With the new year fast approaching, Insurance Times quizzes industry experts on what the insurance sector should watch out for in 2025
Nick Wright, chief business development officer, Pen Underwriting
At this time of year, a natural division occurs between those who dislike and actively avoid a particular C word and those who embrace it with enthusiasm.
That C word is Christmas.
In insurance, 2025 could bring a similar bifurcation, but around a different C word.
That word is change. Wherever we look, from the global geopolitical level down to the individual business client and household customer, change will be the overriding and inevitable trend for next year.
The focus for UKGI firms must be on embracing change and its consequences, rather than resisting it.
The government’s Autumn Budget, announced in October 2024, has introduced challenges and opportunities flowing from taxation and investment shifts. The full impact of this is yet to be realised. This coincides with a whole new regulatory landscape that businesses need to navigate.
Further change will flow from continued consolidation. Some potential taxation changes, such as those impacting private equity, could heighten consolidation. The administration changes needed to meet regulatory requirements could also contribute to a consolidation uptick, especially for smaller firms.
For acquisitive firms of scale looking to bring new expertise and capabilities on board to add value for customers, these changes could create opportunities.
Firms must keep enhancing customers’ digital journeys too or risk being left behind by the industry.
However, with any change comes uncertainty.
The role of the UKGI industry is to anticipate this and devise ways to address challenges. This ensures brokers can continue supporting their end customers in the directions they need to take.
If there is another overriding UKGI catchphrase for 2025, it will be value. This means finding ways to grow, develop and acquire it, maximising it for customers and demonstrating it to the regulator.
John Dunn, managing director, Brokerbility
While underlying inflation has softened, buildings underinsurance appears to be receiving less media attention.
However, industry experts continue to advise that the majority of UK buildings carry some level of underinsurance. This remains a critical issue that deserves the industry’s attention.
As cars become more technically advanced, the cost of repairing them has also risen.
This is coupled with difficulties in sourcing parts for certain vehicles, which results in them being off the road longer and accumulating substantial hire charges. Controlling the car hire costs component of motor claims requires a concerted effort.
Following strong insurer profits and significant growth ambitions for 2025, competition is increasing across most lines of business. The market is once again experiencing a softening in rates across product categories.
The time brokers spend on regulation continues to grow, causing a greater drain on resources and an increasing cost factor.
In the insurer and large broker arena, sustainability has become a core focus. For many regional brokers, however, it is not yet a primary consideration. This is likely to change as more commercial clients and consumers factor a supplier’s sustainability approach into their purchasing decisions.
Delivering products and services efficiently through digital means remains a significant area of focus. Insurers have signalled a clear intention to expand this remit and it is expected to become a key area for innovation and growth in 2025.
The insurance sector offers varied and rewarding career opportunities, but too few young people are aware of them. This lack of awareness has contributed to an ongoing shortage of talent and skills in our industry. While broking trade body Biba is undertaking valuable work in this area, the sector as a whole needs to do more to address this challenge.
John Bissell, executive director, Chartered Institute of Loss Adjusters
Despite ongoing volatility and uncertainty, politicians, businesses and consumers will focus on economic growth in 2025.
From an insurance perspective, this raises a key question – how will the insurance industry better enable economic growth?
Insurance acts as an enabler for individuals and businesses. It provides consumers with peace of mind, allowing them to make large purchases – such as homes and cars – while still participating in the economy.
Insurance also supports e-commerce and digital transactions by offering protection against fraud and cyber risks.
For businesses, insurance safeguards operations, enhances economic resilience and fosters innovation.
New products and coverage are essential around emerging technologies such as autonomous vehicles and renewable energy projects. By managing risks, insurance helps make investments into newer or less mature fields more appealing to both domestic and international investors.
UKGI’s narrative for the new year is increasingly focused on the need to adapt products, services and policy wordings to further enable investment in economic growth.
This includes covering new technologies, such as artificial intelligence (AI) and alternative energy sources.
It also requires getting the basics right and delivering on the promise of insurance through efficient, fair and equitable claims outcomes that benefit both policyholders and insurers.
Regulators, by extension, must strike a better balance between proportionate regulation and allowing insurers the flexibility to manage risks effectively while still supporting growth and investment.
Marco Distefano, home and motor managing director, Axa Retail
There are several trends set to impact the insurance industry in 2025, but one important area of focus is AI.
We’ve seen significant advances in technology and the use of AI in the sector over the past couple of years. This is expected to continue at pace in 2025, offering opportunities to improve services and overall efficiency.
That said, as technology use increases, so do the risks. The safe and responsible use of AI is key – particularly when it involves customer data.
With the ability to capture and analyse more data using innovative tools, insurers are likely to move away from traditional policies in favour of propositions tailored to the specific needs of individual consumers.
Customer demands and expectations are changing and we must ensure we keep pace by offering digital products and services that meet their needs.
In our business, we see technology helping to upskill and refocus resources to drive customer value. Currently, one in three of Axa Retail’s colleagues use AI daily to support their roles and up to 20% of all retail customers are notifying claims online.
The insurance industry has traditionally lagged behind other sectors in terms of digital innovation. This highlights the need to capitalise on the opportunities presented – while still being mindful of the potential risks and ensuring a balance is struck.
As a business, we are investing in data and the digital transformation of our products and services to improve our ability to identify risk and enhance customer journeys.
We are also actively exploring where technologies such as generative AI can help to accelerate time intensive manual processes and improve accuracy and consistency, allowing our colleagues to focus on customer-centric tasks.
Exploring how to embed the use of digital tools into standard practices will help prepare us to make the most of the technological advancements that are inevitable in the future.
James Nicholson, chief claims officer, Zurich UK
Rising claims costs have been a notable trend in recent years, driven by changing weather patterns such as floods, wildfires and storms. This is a development likely to persist into 2025.
Additionally, the ongoing geopolitical uncertainty and a significant number of protests – both peaceful and otherwise – are expected to continue. These factors contribute to supply chain disruptions, property damage and liability claims.
The interaction between AI, automation and customers – as well as the ways AI can augment the work of businesses and the insurance sector – has been a key topic of discussion throughout the past year and is set to remain an important area of focus in 2025.
Questions around how, when and where AI is used to enhance business operations will likely remain at the forefront of industry dialogue.
With the wealth of data available in the sector, another critical consideration is whether this data is, in fact, being harnessed effectively. Are we equipping the workforce of the future with the necessary skillsets and tools to analyse and utilise this data?
Looking ahead, 2025 could well be the year that UKGI fully realises the value of the data it holds.
Beyond the world of insurance, I've ventured into creative pursuits that promote inclusivity and representation.
My written work has found a home in publications such as Orange Magazine, Peahce Project, and others.View full Profile
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