The year 2024 was a volatile one for P&C insurance carriers, prompting many insurance professionals to speculate about what 2025 has in store. On a positive note, U.S. carriers posted a $4.1 billion net underwriting gain on P&C for the first nine months of 2024. That's outstanding news, especially when we look back at the $32.1 billion loss from the same period in 2023. These positive results were influenced by $8.5 billion of favorable reserve development and an uptick in the industry's combined ratio to 97.9.
P&C claims organizations also faced continuing pressures, though. Litigation rates went up, and the industry saw yet another increase in the total number of nuclear verdicts. Claims and loss development continue to be volatile, with so-called "sleeper" claims on the rise. Core inflation is having an impact, as well, driving up the cost of medical care for claims involving a bodily injury.
To add to the pressure, demographic changes are making it increasingly difficult to attract and retain experienced claims adjusters. That's driving many insurers to turn their attention to operational efficiencies. Reliance on manual processes leads to overburdened claims management teams, which damages both outcomes and customer satisfaction. Claims leakage is a persistent issue, yet the problem only stands to get worse as the war for talented personnel intensifies.
Unfortunately, most carriers lack the data-driven insights necessary to effect meaningful change. Reliance on legacy systems is a significant barrier, yet 74% of insurance companies still perform their core claims management functions using outdated technology and poorly integrated point solutions.
See also: Predictions, Wishes and the P&C Industry in 2025
What Can Insurers Expect in 2025?
Where does that leave us with respect to trends for claim operations in 2025? Insurance analysts and industry insiders predict a transformative year ahead, as top executives increase their focus on efficiency and growth. Carriers will apply lessons learned over the past few years to hone their technology strategy and fine-tune their approach to partnerships. Here are some key trends to watch for in 2025:
- AI will power data-driven insights to a new level. Insurance industry pioneers in AI and machine learning have discovered what works, what doesn't and which approaches add the most value. With the road map proven, AI adoption will shift into high gear.
- Technology modernization will accelerate, as P&C carriers increase investments in new technology to support stronger integration, operational efficiency, digital distribution and greater flexibility in their interactions with distribution channels.
- Digital experiences for customers and agents will gain momentum. Omnichannel digital interactions are the new norm, as customers have come to expect anytime/anywhere access via their preferred channels of communication. Agents and partners, likewise, will benefit from improved digital experiences.
- Insurers are already preparing for the next wave of innovation, as the transformative impact of technology leadership has become clear. This increased focus on innovation will gain momentum in 2025.
- Tighter collaboration between claims management and underwriting will take on greater importance, as insurers refine their approaches to risk assessment, policy formulation and improved claims outcomes.
See also: A Tipping Point for P&C Litigation
Planning for a Transformative 2025
Technology holds the key to making 2025 a transformative year for P&C. AI and machine learning are delivering significant ROI, and core system modernization is removing long-standing barriers to innovation and efficiency. Digitization is improving brand loyalty and satisfaction, and it's dramatically increasing the productivity of customer-facing teams.
With any emerging technology, early adopters blaze the trail by matching capabilities with use cases, then piece together various components to deliver a complete solution for their business requirements. In other words, the "build versus buy" debate leans heavily toward a DIY approach for new technologies. That can be expensive, and it invariably takes longer than expected.
Fortunately, the industry has passed that early-adopter stage with AI and machine learning. Transformative products can give insurers a complete and up-to-the-minute picture of their entire claims portfolio, with detailed insights into litigation risk, medical outcomes, potential fraud and overall risk.
The bottom line: Today's insurers have access to purpose-built technologies that have consistently delivered outstanding results for insurance carriers around the globe. By adopting proven out-of-the-box technologies, P&C insurers can confidently achieve real-world ROI in the triple digits, enhancing both the art (decision-making) and science (data) of what they do.
As first seen in Carrier Management.
