By Luca Russignan, Head of Insurance - Capgemini Research Institute for Financial Services
Capgemini’s Top Trends in Property and Casualty Insurance for 2025 outlines three pivotal themes driving this evolution: Customer First, Enterprise Management, and Intelligent Industry. Together, they highlight the need for customer-centricity, operational excellence, and technological innovation to boost profitability, optimize operations, and unlock new revenue streams.
Customer-first: Fueling business expansion
In today's competitive landscape, customer engagement is no longer a luxury – it's a strategic imperative. Organizations spend on average five times more to acquire a new customer than to retain an existing one. This is why the focus is shifting to retention and maximizing customer lifetime value.
Capgemini’s World Property & Casualty Insurance Report 2024 reveals that 63% of policyholders are willing to share personal data for greater transparency and personalized discounts, and insurers should seize this opportunity. This dynamic underscores the importance of building trust, which enables personalization, in turn, building loyalty.
As customer needs evolve, insurers must reimagine customer journeys to address the unique demands of emerging segments. The aging population, for example, presents opportunities for offerings focused on services and assistance. Similarly, the growing gig economy and hybrid work culture blurs the boundaries between personal and commercial insurance.
Modernizing core systems and leveraging advanced analytics can position carriers to precisely segment customers, identify cross-selling opportunities and maximize growth. The focus is shifting from rate hikes to innovative, personalized solutions that deliver value and strengthen loyalty.
Enterprise management: Securing a competitive edge
Increasingly frequent and severe natural disasters highlight the growing accumulation of assets in high-risk areas. The Los Angeles fires caused unprecedented damage, exacerbated by the dense concentration of wealth in selected urban and suburban zones.
P&C insurers can play a foundational role in the global transition to a more sustainable economy with their reach, risk assessment expertise, financial resources and ability to innovate. Their broad customer base enables them to engage with nearly all segments of society and creates the potential to influence and incentivize a wide range of stakeholders.
To address these challenges, adopting forward-looking risk models that incorporate advanced climate simulations, real-time monitoring, and predictive analytics is critical. These models enable insurers to anticipate risks more accurately, price policies dynamically, and mitigate losses effectively.
Dynamic pricing is thus more critical than ever. Our World P&C Insurance Report 2023 survey revealed that 73% of policyholders want personalized pricing. Insurers with advanced pricing capabilities can integrate new data quickly, providing more accurate risk assessment and pricing that benefits the insurer and the policyholder.
The industry is also taking action. We have seen the Global Corporate and Specialty (GCS) team from UK insurer Aviva partnering with hyperexponential, a UK-based insurance-pricing specialist, to implement the hxRenew pricing platform. This partnership cut Aviva’s build time by 75% and created 20 new models in nine months, freeing up time for actuarial tasks and business analysis.
As a result of high-speed pricing, underwriting is also evolving. AI-powered underwriting workbenches bring real-time access to relevant data through a unified platform, addressing data integration challenges and enabling underwriters to make informed decisions faster. These tools help streamline operations, automate repetitive tasks, and improve risk assessment. In turn, automation frees underwriters to concentrate on complex risk analysis and strategic decision-making. The result? Improved efficiency, better accuracy, and enhanced customer and broker experience, which ultimately unlock growth and profitability.
Operational efficiency also remains a top priority. Robotic process automation (RPA), artificial intelligence (AI), and machine learning streamline claims processing, customer service, and underwriting, enhancing profitability by reducing costs while maintaining quality. Moreover, insurers are investing in intelligent digital tools and training that empower agents with personalized insights, further strengthening relationships and retention.
Intelligent industry: Building resilience through innovation
Gen AI is transforming nearly every industry, and insurance is no exception. From delivering personalized customer interactions and enhancing claims to streamlining underwriting, harnessing the power of Gen AI can unlock significant business value. However, as with any emerging technology, it will require carriers to establish a strong foundation of high-quality data that is accurate, reliable, and processed in real-time. The added value will arrive from a combination of both AI models and human processes.
With increasing data usage, robust cybersecurity becomes essential. Insurers are investing in advanced breach prevention systems and regulatory compliance measures to safeguard data. These efforts build trust and ensure continuity in the face of cyber threats.
With the growing abundance of data, modern cloud-based data infrastructure revolutionizes data access, empowering informed decision-making across the insurance value chain.
Finally, cloud-based solutions enhance operational efficiency, strengthen risk management, and reduce IT costs through flexible pay-as-you-go models. These solutions are essential for adapting to changing market demands and achieving long-term sustainability.
Conclusion: Thriving in a dynamic environment
As the challenges of economic uncertainty, risk accumulation, shifting liability profiles and evolving customer expectations intensify, insurers need to balance adaptability and innovation. By focusing on customer-first strategies, operational excellence, and intelligent technologies, P&C insurers can build resilience and unlock new opportunities in 2025 and beyond.
Proactive adaptation will separate leaders from laggards. With the right mix of technology, strategy, and customer-centricity, insurers are poised to deliver sustained value to policyholders and drive long-term growth.
|
