The 6 trends shaping the insurance industry in 2025

The mission of the insurance sector is to evaluate risk and protect against it.

But the volatility of the past few years has made meeting that objective increasingly challenging.

Complex and unpredictable market conditions in 2025 will force many insurers to rethink their strategies, seeking new ways to balance customer needs with long-term business sustainability.

For forward-thinking firms, this uncertainty presents an opportunity.

By embracing technology and modernizing operations, insurers can transform back-office processes, deliver more personalized solutions, and expand market value.

With real-time data and insights at their fingertips, they can build greater agility and resilience. 

Here are the six key trends reshaping the insurance sector in 2025.

1. Changing customer expectations

Today’s insurance customers aren’t just looking for financial protection.

Their engagement with digital-first companies, such as Amazon, Spotify and Netflix, and their hyper-personalised products have raised expectations across the board.

Competition for loyalty is intensifying, and consumers are more willing to vote with their feet if their needs aren’t being met.

Customers in 2025 will seek:

• Seamless, personalized solutions available on demand.
• Self-service capabilities through intuitive apps.
• Centralized information via easily-accessible online portals.

Many insurers struggle to meet these expectations due to outdated systems and manual processes.

Reliance on fragmented workflows and tools like Excel reduces productivity, hinders growth, and ultimately compromises customer experience.

Modern cloud-based platforms can eliminate silos, replace legacy systems, and deliver real-time insights into customer needs.

This technology enables insurers to enhance the customer experience while streamlining internal accounting functions––creating stronger loyalty and attracting new audiences.

2. Rising adoption of AI and automation

Amid the hype around AI and automation, a new IBM study has found 77% of insurance leaders acknowledge that generative AI is necessary to keep pace with competitors.

Investments are expected to surge in 2025, as organizations move to adopt the technology across multiple departments and workflows.

They will leverage those tools to:

• Predict risks with greater accuracy.
• Optimize pricing decisions.
• Deliver personalized products such as usage-based insurance (UBI) that adjust premiums based on-real-time data and behavior-based models enabling customized coverage.

Generative AI, which has garnered a great deal of public attention in recent years, can help to automate routine back-office tasks, accelerating claims processing, reducing fraud, and cutting costs––while freeing employees to focus on strategic work.

The question isn’t whether to adopt AI, but when.

Beyond selecting the right software partner, insurers must also consider the impact of talent acquisition and prioritize upskilling.

Learning how to write effective prompts, for example, will help ensure teams can adopt and maximize the impact of these new tools.

3. Growing cyber threats

Cyber attacks are one of the top five threats in the latest World Economic Forum’s Global Risks Report, with the cost of cybercrime expected to reach $27 trillion by 2027.

The number of cyber-attacks targeting insurance firms specifically also continues to rise.

Criminals view insurers as prime targets due to their vast stores of personal customer data.

A breach can trigger devastating consequences: lost customer trust, regulatory fines, and mounting legal costs.

To mitigate these risks, CFOs should:

• Implement GAAP-compliant platforms for secure data capture and insights.
• Deploy AI to identify anomalies, flag suspicious activity, and verify data accuracy.
• Maintain rigorous security protocols through collaborative security planning.

Additionally, customers are increasingly seeking robust coverage to protect their assets against increasing cyber risks, which will require insurers to adapt policies accordingly. 

4. Sustainability matters

The insurance sector is one that will be considerably impacted by climate change ––driving organizations to embrace environmental, social and governance (ESG) objectives more fully in 2025.

According to PwC, 85% of global insurers believe ESG will impact all functional areas of their business, with climate change mitigation being their primary motivation.

From underwriting to operations, it will become more common for insurers to include ESG stress testing and climate analysis data into their risk models, as well as create greener insurance products that directly address climate risk.

There’s a benefit to insurance CFOs, too, as building internal ESG expertise and measuring organizational impact provides crucial preparation for upcoming carbon footprint disclosure requirements.

5. Regulatory upheaval

Changing rules around data security and revenue recognition will lead to more complexities around compliance in 2025. 

The transition in political leadership will amplify this uncertainty:

• The incoming US administration’s first 100 days seems likely to drastically alter the regulatory landscape.
• Staffing challenges may intensify in an industry already facing skills shortages.

CFOs thinking ahead of the curve are implementing solutions that centralize compliance and risk management to prepare for the potential impact of rapid regulatory changes in the near future.

6. Cross-industry collaborations

Driven partly by customers seeking more value during their purchasing journeys, many insurance firms have embraced more collaborative approaches over the last few years––a trend which looks likely to continue.

Embedded insurance expands coverage accessibility while generating new revenue streams for providers.

A recent industry survey found 81% of finance executives making decisions about insurance products believe embedded insurance will shift from optional to essential.

Building a network of trusted partners for customer-centric ecosystems enables insurers to enhance service delivery and tap into a wider market – but requires robust data systems and digital infrastructure capable of seamless integration.

Final thoughts

While many insurance business models will struggle to maintain pace with change in 2025, the new year presents fresh opportunities.

Success requires CFOs to guide their firms toward:

• Investing in modern cloud platforms that drive innovation, productivity, and growth.
• Leveraging the value of their data for stronger financial health.
• Building resilience to embrace market uncertainty.

As expectations evolve and the industry transforms, market leaders will differentiate through increased transparency, proactive data-driven decisions, and seamless fulfillment of emerging customer needs––competitive advantages only possible through strategic technology adoption.

Ready to explore accounting software that positions your insurance firm for success in 2025 and beyond?