The upheaval caused by the pandemic has prompted significant strategic shifts in the P&C insurance sector over the last few years. Disruptions in supply chains have affected replacement and repair costs across various lines of business, while catastrophic events have driven up reinsurance expenses. In response, insurers have tightened their belts, increasing rates to the maximum the market can handle and withdrawing from unprofitable segments. However, this approach is not viable long-term, as the insurance industry cannot thrive in a diminished addressable market.
As we move into 2025, insurers are shifting their focus back to growth, but the approach has evolved. Unlike the pre-pandemic era, which emphasized aggressive customer acquisition, the current economic pressures of the 2020s are steering insurers towards enhancing efficiency in the core business processes that support the entire value chain. Transformation now goes beyond merely implementing attractive digital interfaces for insurance products; there is a growing emphasis on optimizing the underlying systems and processes.
Looking ahead, insurers are concentrating on achieving transformative efficiency by harnessing artificial intelligence, including the rapidly emerging generative AI and large language model (LLM) technologies, along with other automation methods and streamlined processing to minimize the time spent on individual tasks within the organization. Celent identifies five key trends driving this transformation:
These five themes, which appeared in our 2025 Previsory, guide our research agenda in the coming year. So far 2025 is proving to be a transformative year in insurance, buoyed by a clarity of purpose around efficiency and growth and with lessons in technology strategy, partnerships, and market dynamics from the past several years of chaos absorbed.
The challenge for insurers is that to meet growth objectives by leveraging digitalization, they also must make major investments in data management and governance. Insurers are also contending with a changing workforce, with experienced workers across functional areas leaving the industry via retirement. Not only do they need to be replaced, but their years of experience must be passed down to a new generation – creating another barrier to efficient operations.
In 2025, Celent research will continue to dive into the many options insurers have to use technology to mitigate the risks associated with these challenges. We welcome our clients’ input into helping us shape these conversations and stand ready to develop this thought leadership into actionable insight for you. That includes helping vet partners and solutions, develop strategic plans and everything in between. There’s a lot of headroom for innovation in insurance this year – let’s explore it together.
Finally, you’ll notice a slightly different way we present our insights in these research agendas. We clarified that all our published research falls into three major categories and eight distinct types of insights, each bringing different benefits to our clients, and this is how we organize the presentation of published and upcoming insights.
