The Tech Winds of Change: Insurance Predictions for 2025
On the heels of every new year comes the inevitable flurry of predictions for the months ahead, and we’re kicking off 2025 with our own list of what’s in store for insurance and insurtech. Customer engagement, hyper-personalization, and how AI strategy will be the data strategy for many carriers this year are just some of the hot topics, so tune in as special guest Graham Gordon, Sapiens’ Director of Product Strategy, unpacks these ideas with host Amanda Ingram, Sapiens’ P&C Product Strategy & Marketing Manager, in our latest podcast.
Amanda Ingram|Graham Gordon
Amanda Ingram: Hello and welcome to Sapiens Insurance 360 Podcast. I’m your host, Amanda Ingram, P&C Product Strategy and Marketing Manager at Sapiens. I’m really pleased that you’re out there listening. This is where we discuss the latest news, trends, and issues from across the insurance solutions and technology spectrum. But first, let me wish all our listeners a happy 2025. It’s the start of a new year, and we have so much exciting and timely podcast content coming your way in the months ahead. But for today, what better way to kick off 2025 [than] with a list of insurance and insurtech predictions from Sapiens’ very own Graham Gordon, Director of Product Strategy. Graham, happy new year and welcome back to the show!
Graham Gordon: Thank you very much. Happy new year to you, too!
Amanda Ingram: Well, we have a lot to cover today, Graham, so let’s dive in! As we know, the industry last year was chock-full of game-changing AI, automation, and data-centric technologies that transform so many areas of insurance, including risk assessment, customer experience, and so much more. So Graham, talk to us about other insurtech trends, especially AI-based trends that you anticipate are coming in the year ahead.
Graham Gordon: So what’s this, like prediction number one?
Amanda Ingram: Prediction number one, prediction number two, however many you like!
Graham Gordon: Okay, so prediction number one, I think a company, an insurance company strategy is going to be, the AI strategy is going to be the data strategy. I’m going to give you a couple of reasons why. So going back to last year and the six months before that when Generative AI landed on us, I think now that period of time is all about understanding the capability and getting really excited about it, and then slowly going through the processes and working out the compliance side of it, the data and limitations, the tech stack. So I think prediction number one, going back forward to this year is, look, it’s evolving beyond buzzwords now to become this integral part of the insurance operation and generically the capabilities, optimizing the workflows, streamline [streamlining] of the claim intake process, and allocations. So I think that kind of period behind us is now and all of a sudden, we’ve all just realized, the insurance companies have realized, this AI strategy is actually a data strategy.
Amanda Ingram: I think it’s fascinating, Graham, and it’s a huge area to talk about, and we could spend hours doing this, but I think there’s a particular concern that we’d like to address, and that’s regarding the Generative AI crowding out the human labor element and resulting in a workforce reduction. Do you see that playing out, or is that just everyone’s worst-case scenario?
Graham Gordon: I’m not sure, and I think it depends on the type of insurance company and their customers and where they are and what segment they’re going after. So generically, I think we’re a lot clearer now and I think there’s going to be a lot more clarity around the legislation in 2025, the permissional use of AI, the GDPR impact, and I think this is kind of, you know, when we start our development cycle, we started on commercial and SME because we don’t have to worry about this personal data so much. And I think what’s going to happen this year is, we’ll have a lot clearer understanding about the role of personal consumer data, and that in turn will enable us and the insurance companies, the business strategy will become clearer. I think that’s really, really important. And when I look at it like this, just because a company can reduce their workforce using Generative AI doesn’t mean they should and doesn’t mean they will. And I think we’re going to see a lot of corporate soul-searching this year where the organizations think, hey, what is this our brand? Do we really want to become this organization where it’s a 100% automated, whereas a 100% touchless, and there’ll be choices made, and these choices will point themselves at particular consumer segments or particular business segments that want to deal in a particular way. Now, how do we track this prediction? So the most important thing to track is the new hire space, and I’d almost predict that recruitment will be the first to be hit. So if organizations are becoming super-efficient, if the communication with customers is totally changing, the number of new employees that the insurance company is on board will be the first number we will see. So I’d almost predict that’s the first area to watch.
Amanda Ingram: I think it’s fascinating and I think the impact of AI on the employment and the workforce is going to be quite an interesting trend to watch and it is going to be an experience for particularly newcomers to the market as well. Do you have any predictions when it comes to more tailored customer engagement, particularly about the user experience and the personalization side of things, when using some of these advanced technologies that we’ve just been talking about?
Graham Gordon: Yeah, this is the buzzword back again to hyper-personalization and customer 360, and everything like that. But let’s say at the start, the AI strategy is a data strategy and how I could bring this to life for people is just work it through to its logical conclusion. If GenAI’s models have access to the same data sets, what do we think is going to happen? So you’ve got the Generative AI models, they’ve all got the same data, they’re all really, really smart. They can mimic, they can do, they can do, they can do it again, which is learning constantly, they are all going to give the same answer. I just did some work with a car insurance and on the comparison websites, the price differential between the top 10 brands is like 3%. So a 3% difference in price from the lowest price that was presented to the consumer and the highest price that was presented to the consumer. So what are you going to do when you’ve got GenAI all over this and it’s zero? So the focus has to be on data enrichment and the focus for the insurance companies is, I’ve got better data than you have, therefore my machine’s decisions are going to be better.
Amanda Ingram: It’s fascinating, we could talk about it for hours and I think you’ve got a really valid point there. You know, how do we actually differentiate as insurance organizations if everybody’s using the same data sets or using the same GenAI, etc. It’s fascinating!
Graham Gordon: Or a good time to be involved in branding!
Amanda Ingram: Exactly! So thinking ahead and looking ahead towards the future, any thoughts or predictions about one of the key topics that insurance companies are always worrying about, which is fraud and risk assessment? Because there’s such a significant problem and there’s some huge costs associated with that and an impact as well, both on the human impact and there’s multiple touchpoints across all of the value chain. Do you have any predictions of what those AI technologies are going to do or are there going to be significant tools or strategies to manage that?
Graham Gordon: Yeah, this one’s a little bit uncertain, but when we talk to customers and we do the workshops with them, particularly on claims, fraud’s always number one ranked. I look at it and go, well, it is important, but there’s other stuff you could be doing that’s more important. And what I think it is, is they don’t really, you know, despite all the toolkit we have, we’re uncertain about what actually is the percentage of fraud in our claims and how much it really costs. Because we know, we know, but we don’t know what we don’t know. I think this traditional way that fraud’s being tackled, whereas consumers or people gaming a system or being fraudulent, I mean the sophistication of this kind of gang-leg fraud is probably just outpacing the traditional fraud checks. So what I’m meaning here is, I’m meaning, if we start to think about fraud as something we can do at ever-greater volume, because we can understand, we can process faster, and we can check faster, and then GenAI can do its thing, quicker. We have to move this kind of fraud scoring away from point-of-claim to point-of-quote, so we’re not bringing those kind of uncertain areas onto our business at the moment. I think we’ll be working on that with our customers is how we bring this fraud check forward right into the start of the buying process and not the end of it.
Amanda Ingram: Many thanks, Graham! Fantastic insights and very, very interesting. Do you have any other thoughts on any other generalized predictions? Is there anything unexpected out there that you can foresee? What’s your crystal ball telling us to look out for?
Graham Gordon: The way that I’m thinking about this in our company, of our customers that we’re working with is, there will be a cost to the use of this technology. And if you think about how much has been invested by Microsoft, who [is] our partner and we work with them, the only insurance company that’s working with them, but this cost is kind of a little bit uncertain at the moment, and organizations will be tracking the use of Generative AI and they’ll be linking it to an ROI, like you would. There’s a couple of examples that’s been used with the big US CRM giants, where they’re experimenting, charging per unit of work completed. So if I’m a human, I take an inbound telephone call, I take an inbound claim submission, I know the cost of this, what happens if an AI agent can fulfill that query that would typically be handed by a person? So you’re getting down to this concept called a unit of work. What’s the value of the unit of work? And there’s going to be certain segments of the industry with experiment with pricing like that. And I think that’s really, really important to understand this. The second part of it, enhanced self-service. If the insurance companies, whether it be policy, claims, billing, whatever, is moving more and more of the administration of the policy down to the consumer itself using, I don’t know, voice AI chatbots, AI chatbots, whatever the technology is going to be, and it’ll be omnichannel. What’s that going to mean? Does that mean the insurance now has more time to take care of their clients or particular segments that don’t want to engage this? So that’s going to be interesting to track as well. And I think the commercial market’s going to be impacted and probably impacted more than we know. So the kind of small business insurance company that has traditionally gone to a broker will go online, and we’re seeing evidence of that already. And what that’s going to do is, that’s going to change the nature of the commercial broker and it’s going to free them up a lot more to focus on service and it’s going to free them up a lot more to focus on more complex risks. So over the next 12 months, I think three of those things are going to play out all at once, and that’s what’s making it quite interesting to work in this environment at the moment. So there you are. We can review this in 12-months’ time and see how much of that was actually true!
Amanda Ingram: Well, I look forward to doing that review with you. There’s so much going on, isn’t there in terms of development in today’s insurtech ecosystem. And I hope I speak for all our listeners when I say that I’m excited to see what’s coming as well, and the next 12 months is certainly going to be an exciting arena to watch, and it’ll certainly raise the bar on the next generation of technologies. So Graham, thank you for joining us. It’s been a pleasure as always, and it’s been great to have you on the show again and we’re delighted to have you. So thank you to our listeners, we always love to hear from you, so if you have any comments or you would love to follow us to social media, please reach out to us on our channels. And don’t forget to subscribe to our podcast. We’ve got a lot more coming this year, so stay tuned to our Insurance 360 podcast. Bye for now!
