2024 was the year we saw signs that the insurance industry is rapidly transitioning from experimenting with generative AI (GenAI) to deploying scaled production use cases.
Fuelled by new data streams and advancements in IOT, and wearables, predictive capabilities are reaching new heights. However, prediction alone is insufficient to reduce loss ratios systemically; meaningful impact requires proactive interventions such as education, guidance, alerts, and real-time responses based on monitoring and analytics.
The industry is transforming towards a smarter, more personalised risk ecosystem, where AI becomes a foundational capability embedded within intelligent products and processes.
With this as a backdrop, here are eight predictions for 2025 for the insurance industry:
Rise of predictive and GenAI pairing. Amidst the continued hype regarding GenAI, other streams of AI have received less attention. Insurers and insurtechs are seeking ways to combine different streams of AI to deliver vastly improved outcomes and mitigate risks. The pairing of predictive AI with GenAI orchestrated by AI agents is becoming an extremely powerful capability to drive customer experience and improve protection.
Depth of AI will define industry leaders. While early adoption of GenAI can be a differentiator, staying ahead in 2025 will demand more complex workflows and non-public data to provide a unique experience. Whether it is traditional insurance products like home, auto, pet, life, health, or solving for broader protection needs like cyber and identity, delivery and e-commerce, or warranty, traditional product constructs and features such as excesses, waivers, inclusions, and pricing will continue to hold relevance for consumers.
AI embedded within these products and trained on domain-specific datasets and knowledge bases will become increasingly powerful in delivering optimal protection for customers. AI is also becoming a product differentiator for early movers. However, consumers, supported by evolving privacy laws and regulations, will ultimately decide how much personal data they share to access these advancements.
Hyper personalisation through embedded intelligence. We are witnessing a growing trend of original equipment manufacturers (OEMs) integrating embedded AI into their devices and operating systems. Similar advancements are emerging in wearable technology and digital lifestyle and protection solutions. This embedded intelligence enables the development of hyper-personalised customer insights, providing tailored coaching, advice and real-time recommendations.
With AI’s ability to enhance loss prediction, prevention and recovery, the insurance industry will make significant strides in integrating AI into traditional and emerging product verticals.
With GenAI, choice matters. When saying choice matters, it is not about deciding on a specific foundational model. It is the availability of choices and access to a wide range of options that matter as the insurance and protection industry addresses the needs of numerous use cases. Over the past year, we have witnessed a surge in public and private large language models (LLMs) and the distillation of models to balance cost and latency considerations.
Even in this early stage of GenAI adoption, the abundance of options makes selecting the right model for each use case significantly easier. Switching between models or choosing from within a family of models is becoming increasingly easy.
We expect regulators to be proactive in embracing AI and developing frameworks for responsible use, ensuring that insurers can balance innovation with consumers’ trust and compliance.
Focus on internal efficiencies and automation. Insurers face growing pressure to operate more efficiently year after year. Nearly every insurer and insurtech is striving to enhance efficiency across the board. From finance, operations, marketing, HR, as well as technology and engineering functions, every facet of the business must adopt AI and advanced automation to remain competitive. Staying ahead will require pioneering efforts and continuous innovation.
Regulatory oversight on AI to accelerate. As AI adoption gathers momentum, so will regulatory scrutiny. AI has advanced so rapidly that regulators have the same challenges as insurers in keeping pace. Perceived customer benefits and risks of sharing and processing data with insurers and third parties vary significantly based on the product and proposition. Regulators will focus on addressing ethical concerns, biases and transparency issues. We expect regulators to be proactive in embracing AI and developing frameworks for responsible use, ensuring that insurers can balance innovation with consumers’ trust and compliance.
Workforce transformation with hyper-automation. The insurance industry is undergoing a generational shift in workforce dynamics. In 2025, automation efforts are poised to accelerate, driven by low- or no-code tools, agentic AI, GenAI foundations, and democratised access to self-service automation capabilities. Technology teams will play a pivotal role in enabling this transformation. 
This era of hyper-automation and AI augmentation will bring significant productivity gains over a multi-year period, impacting every aspect of insurance operations.
New roles will emerge as AI inference becomes embedded in every enterprise application, product and function, prompting the industry to rethink the skills needed to thrive in this new era. Companies that embrace workforce transformation faster will enjoy a sustained period of competitive advantage.
ESG and technology bring a higher purpose. With ESG influencing every aspect of business, industry participants are exploring ways to embed ESG principles in their products and operations. Many organisations have already showcased good practices in key focus areas such as reducing carbon emissions, improving supply chain controls, promoting ethical investments, and reducing waste.
Technology advancements are making it easier to integrate ESG capabilities into insurance and protection offerings – for instance, carbon-neutral products, which are supported by real-time data that can accurately calculate emissions.
Organisations can leverage embedded analytics and real-time dashboards to enhance transparency and accountability in sustainability practices.
Reimagining insurance
As the insurance industry continues its journey into 2025, it stands at the crossroads of innovation and purpose. AI and automation are not just tools for efficiency but catalysts for reimagining what insurance can achieve – driving hyper-personalised experiences, better risk management, and operational excellence.
Beyond financial protection, insurance is evolving to improve lives, enhance well-being and proactively prevent risks. Those who embrace this transformation with agility and foresight will lead the way into a new era of impact and opportunity.
This article is written by David Lynch, Group Chief Technology Officer, bolttech. Lynch is based in Melbourne.
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