2025 PREDICTIONS
AI in Insurance: 2025 Predictions | Insurance Thought Leadership
The proof-of-concepts and pilot projects that dominated 2023-24 are no longer enough as AI reshapes entire industries.
The insurance industry is reaching an inflection point in its technology transformation. According to a 2024 Deloitte survey, 76% of U.S. insurance firms have already implemented generative AI capabilities in at least one business function, with claims processing, customer service, and distribution leading adoption. 2025 will mark a more decisive shift as experiments turn into enterprise-wide implementations.
The past five years have seen traditional operating models struggle to maintain profitability amid rising costs and competitive pressures. While early AI experiments helped some carriers improve efficiency, the real reinvention is only now beginning as organizations move from isolated pilots to enterprise-wide implementation.
Samik Ghosh is the co-founder and CEO of Neutinos, an intelligent automation platform company purpose-built for the insurance industry.
Generative AI and IoT: Insurtech predictions for 2025
Digital Insurance contacted insurance professionals to comment on what they see for insurtech in 2025.
Generative AI will continue to be deployed in several areas across the insurance industry including underwriting, claims and customer service, experts suggest. As more data is gathered from the Internet of Things (IoT) there is also room for better risk assessment and potential loss prevention insights. However, challenges persist related to regulatory compliance, data quality and leveraging these new technologies effectively.
Responses have been lightly edited for clarity.
AI in Insurance: 2025 Predictions
The insurance industry is reaching an inflection point in its technology transformation.
According to a 2024 Deloitte survey, 76% of U.S. insurance firms have already implemented generative AI capabilities in at least one business function, with claims processing, customer service, and distribution leading adoption. 2025 will mark a more decisive shift as experiments turn into enterprise-wide implementations.
The past five years have seen traditional operating models struggle to maintain profitability amid rising costs and competitive pressures. While early AI experiments helped some carriers improve efficiency, the real reinvention is only now beginning as organizations move from isolated pilots to enterprise-wide implementation.
Yet AI implementation challenges persist. Data security, privacy, and integration remain top barriers to AI adoption at scale. The proof-of-concepts and pilot projects that dominated 2023-24 are no longer enough. As AI reshapes entire industries, insurers must confront an uncomfortable truth: transform fundamentally, or risk becoming obsolete.
Key Predictions for 2025:
- Traditional Automation Becomes Obsolete
The era of standalone robotic process automation (RPA) and disconnected point solutions is ending. Forward-thinking insurance carriers will embrace intelligent automation platforms, integrated systems that combine AI, orchestration, and deep insurance expertise. These platforms go beyond automating repetitive tasks; they enable dynamic decision-making, end-to-end process optimization, and real-time adaptability across the insurance value chain.
Samik Ghosh is the co-founder and CEO of Neutinos
2025 State of Auto Insurance: Rate Increases Are Slowing Down in 2025
Relief may be in sight for American drivers as auto insurers pump the breaks on car insurance rate increases for 2025. While premiums are rising for the 7th straight year, on average, drivers should expect to see smaller increases in comparison to last year's reported 16.5% rate increase. Despite a slowdown in rate increases, the average cost of auto insurance for 2025 is expected to reach a record high of $2,101/year, according to The State of Auto Insurance in 2025 report published by ValuePenguin.com, a LendingTree company.
2025 Auto Insurance Rate Predictions:
- Auto insurers will raise premiums by an average of 7.5% in 2025 - with the biggest rate hikes expected from American Family, All State and Liberty Mutual. Drivers in New Jersey, Washington and California will see their auto insurance premiums rise by over 15% in 2025 - the biggest jump in the country.
- The average cost of full coverage car insurance in 2025 will exceed the $2000 mark to touch $2,101/ year. Nevada ($3216/year) and Florida ($3264/year) will overtake Michigan ($3156/year) to become the most expensive state for auto insurance in 2025.
- Drivers with traffic violations will see their premiums jump 53% on average in 2025, with drivers in North Carolina facing the stiffest financial penalties - an increase of 146% for traffic violations and dangerous driving.
- Insuring electric vehicles is getting cheaper in 2025, but insurance for new EVs will still be 23% higher than new gasoline-powered cars. However, insurance premiums for Electric cars made by legacy manufacturers like Ford and Volkswagen are 25% less expensive than insurance premiums for cars manufactured by EV-only companies in 2025 - with Rivian's RV-1, and Tesla's Cybertruck emerging as the most expensive cars to insure.
Editor's Note
Our thoughts and prayers are with the people of Southern California today.
As optimism for insurance stabilization in 2025 is sprouting, today's news underscores the major threats which have plagued the past several years, namely; Climate exposure, Supply Chain/Inflation and Legal Abuse. Still, we look ahead to 2025 and new and encouraging predictions for the new year.
News
California Insurer Canceled Policies Months Before Los Angeles Wildfires
State Farm, one of the biggest insurers in California, canceled hundreds of homeowners' policies last summer in Pacific Palisades—the same area which is now being ravaged by a devastating wildfire.
The move was justified by the company as an attempt to avoid "financial failure" as the frequency and severity of wildfires is growing in the Golden State, especially in at-risk zones. But as the multiple fires currently burning through Southern California threaten to cause devastating losses for residents, many will likely need to rely on their insurers to get back on their feet after the blazes are contained.
Newsweek contacted State Farm and the office of Commissioner Ricardo Lara for comment by email on Wednesday early morning, outside of standard working hours.
Why It Matters Several private insurers have cut coverage in at-risk areas across California in the past three years, leaving homeowners scrambling to find options for coverage. As a result, California's FAIR Plan, which works as an insurer of last resort in the state, has more than doubled its policies between 2020 and 2024, reaching a total of 452,000, as reported by CapRadio.
Most insurers who have limited their offer in the state mentioned the rising wildfire risk as well as the state's regulations as the main reasons behind their decision. Unable to increase their premiums to a level that will match their growing risk, companies have decided instead to cut coverage.
This has triggered an ongoing property insurance sector crisis in the Golden State as homeowners are finding it increasingly harder to find coverage at a time when they so desperately need it.
U.S. Port Workers Threaten Strike as Contract Extension End Approaches
A showdown between U.S. longshoremen and port operators over automation could grind East and Gulf Coast ports to a halt on Jan. 15, disrupting supply chains and potentially costing the economy billions.
The International Longshoremen’s Association (ILA), representing 45,000 dockworkers, has threatened to strike again if negotiations with the U.S. Maritime Alliance fail. The conflict centers on the expansion of semi-automated cranes that replace traditional human-operated equipment.
The first ILA strike at 10 East and Gulf coast ports temporarily ended in early October with a contract extension, but it could resume Jan. 15 if negotiations to finalize a new contract fall through.
The strike was initiated after an Alabama port violated the union agreement by implementing automated gate checks to inspect cargo and confirm the bill of lading matches the contents.
Automating that task affects, on average, about 25 people’s jobs at a port the size of the Port of New Jersey, explained Greg Horn, chief information officer for PartsTrader, so it’s a “small percentage of workers,” but the union is concerned automation will further spread to other parts of the process.
“This isn’t about meeting operational needs,” Dennis Daggett, the union’s executive vice president, wrote in December. “It’s about replacing workers under the guise of progress while maximizing corporate profits at the expense of good-paying, family-sustaining U.S. jobs.”
US P&C insurance sector set for stable ROE in 2025 – Swiss Re
Industry shifts focus to rate adequacy and long-term growth in personal lines
US P&C insurance sector set for stable ROE in 2025 – Swiss Re Reinsurance
The US property and casualty (P&C) insurance sector is expected to achieve earnings stability in 2025, according to insights from Swiss Re.
Return on equity (ROE) is projected to remain at approximately 10% through 2025 and 2026, driven by steady underwriting performance and modestly higher investment income. This follows four years of around 10% premium growth, which have helped insurers recover from elevated claims costs that began in 2021.
Swiss Re anticipates that premium growth will slow, with a forecasted 5% increase in 2025 and 4% in 2026, compared to nearly 10% in 2024. As insurers approach rate adequacy, the industry is shifting its focus toward growth, particularly in personal lines.
Climate/Change/Sustainability/ESG
15 Weather and climate trends to watch in 2025
From record solar installations to rising electric vehicle sales, the world is in many ways ramping up the fight against global warming.
Yet there are coal-black swans waiting to disrupt the green transition this year. Global power demand is expected to significantly increase as data centers demand more electricity for artificial intelligence. This is forcing some utilities to rethink the phase-out dates of their fossil-fuel power stations. (It’s also causing nuclear energy to have a revival too.)
All of this is happening as President-elect Donald Trump prepares to take office. Trump has already promised to end what he calls Washington’s “green new scam.” On day one he’s pledged to scrap offshore wind projects, which would be another blow to an industry plagued by bottlenecks. He’s also vowed to abandon the Paris Agreement, which calls for nations to limit global warming to ideally 1.5C before the end of the century.
Even before Trump enters the White House, the planet is showing worrying vital signs with scientists virtually certain 2024 was the warmest year on record and the first in which global temperature rise exceeded 1.5C.
What more can we expect in 2025?
Announcements
MarketCheck Welcomes Martin Ellingsworth to Lead Insurance Innovation
Martin Ellingsworth joins MarketCheck to deliver cutting-edge insurance data solutions, enhancing underwriting, pricing, and claims processes.
MarketCheck, the trusted source for automotive inventory and VIN specific build data in the US, Canada, and the U.K., is pleased to announce that Martin Ellingsworth will be representing MarketCheck in the insurance market. Ellingsworth currently serves as President of Salt Creek Analytics, an advisory and consulting enterprise specializing in Insurance Data Science and Advanced Analytics.
With more than two decades of experience, Ellingsworth brings an extensive track record of insurance industry innovation and leadership to MarketCheck. Formerly he was Executive Managing Director, P&C Insurance Intelligence Group at J.D. Power and a Senior Analyst in Data, AI, and Cloud technologies at Celent, Ellingsworth has pioneered transformative solutions that advance the insurance industry. His background includes leadership roles in analytics at USAA, Verisk Analytics (ISO), and Allianz, and he played an instrumental part in creating data analytics and predictive modeling products for a VC-backed insurtech.
Throughout his career, Ellingsworth has been at the forefront of developing and productizing new industry intelligence offerings to assess risk, optimize pricing, enhance rating methodologies, and streamline fraud detection, claims, subrogation, and customer experience processes. His contributions include pioneering efforts in personal auto risk selection, designing cutting-edge predictive models, and bringing emerging technology to traditional insurance workflows for profitable growth. Known for his visionary approach, Ellingsworth has consistently reshaped established industry models by introducing innovative tools and strategies that have helped insurers accelerate decision-making, strengthen customer satisfaction, and improve operational efficiencies.
Events
InsurTech Hartford Symposium 2025 | Connecticut Convention Center
April 29th & 30th
Connecticut Convention Center
The InsurTech Hartford Symposium is a highly immersive conference experience that brings together great minds and world-class leaders offering the perfect ecosystem to Learn, Connect, and Unwind.
The InsurTech Hartford Symposium is in its fifth year and back in Downtown Hartford. People in the region are getting excited to have the event return to their backyard, and people from out of state are happy for us to be closer to transportation hubs such as high-speed trains and BDL airport.
Pre-Day Event; EmpowerHER, April 28th & 29th
Join us for the Inaugural Insurance Thought leadership Event This one-of-a-kind gathering designed to celebrate and empower women and allies in the InsurTech industry. Partnering with the InsurTech Hartford Symposium, we’re offering this exclusive pre-event to maximize your experience in Connecticut and provide you with opportunities to connect, learn, and grow.
This in-person event is dedicated to inspiration, connection, and celebration—a chance to engage with thought leaders, gain career-boosting insights, and foster meaningful relationships that will propel your career in insurance and technology. REGISTER
InsurTech Consulting, LLC and ‘Connected’ newsletter are proud supporters of InsurTech Hartford Symposium and EmpowerHER, available to assist with sponsorship opportunities. Please contact alan@insurtechconsult.com