Insuring the Future: Top Insurance Technology Trends Transforming the Industry in 2025

• Automation: A Driver for Efficiency and Operational Excellence
• The Role of AI: Moving From Hype to Scalable Solutions
• Revolutionizing Distribution Channels with Embedded Insurance
• Cloud Computing: The Backbone of Digital Transformation
• Climate risks and natural disasters: Anticipate and manage risks
• Growing regulatory pressures: DORA goes into effect

Automation: A Driver for Efficiency and Operational Excellence

In 2025, process automation is set to redefine the insurance industry—not just as a cost-saving measure but as a vital strategy for operational excellence. Insurers increasingly invest in IT to streamline key back-office processes such as claims processing, underwriting, and policy management. This shift focuses on minimizing friction by transforming legacy processes with cutting-edge tech like Robotic Process Automation, Artificial Intelligence, and Machine Learning.

By automating these operations, insurers can reduce delays, improve accuracy, and adapt more swiftly to customer needs and market changes. The benefits go beyond cost reduction: enhanced operational efficiency leads to faster service delivery, which in turn boosts customer satisfaction, agent performance, and employee retention. This comprehensive approach not only supports the smooth functioning of daily operations but also empowers insurance companies to be more agile and competitive in a rapidly evolving industry.

Embracing process automation allows insurers to reallocate resources towards innovation, ultimately transforming their business model to better meet the challenges of today’s dynamic market. To implement automation effectively, insurers are leveraging a range of technologies and approaches.

• Robotic Process Automation (RPA) handles repetitive, rule-based tasks like data entry and claims processing, while Artificial Intelligence (AI) powers complex operations such as fraud detection, risk assessment, and personalized customer service.
  
  
• Generative AI further enhances workflows by assisting with content creation, code development, and debugging.
• Modern Core Insurance Platforms are the beating heart of automation in insurance. They cover almost all insurance functions and by unifying and centralizing data and processes they provide everything needed for powering end-to-end automation.
• Application Programming Interfaces (APIs) enable seamless system integration and data exchange, bridging legacy systems with modern solutions.
• Cloud computing provides scalable infrastructure for automation, and low-code platforms accelerate development with customizable templates.
• Natural Language Processing (NLP) has become more broadly available and has become more useful with the rise of Generative AI, conversational commerce, and data analysis. AI systems able to comprehend and interpret human language will become a standard feature of most software in the coming years.
• Fraud Detection & Risk Tools work by analyzing large datasets for anomalies and patterns, while also utilizing data analytics and third-party information to validate customer data. These powerful tools accelerate and expand traditionally slow and cumbersome processes.
• Finally, Multi-Agent Systems merge traditional AI and Generative AI tools to manage complex tasks like dynamic pricing, claims negotiation, and fraud detection.

The Role of AI: Moving From Hype to Scalable Solutions

In 2024, Generative AI captured a lot of buzz as companies started exploring its potential. While the hype was significant, several successful pilots indicated several promising AI use-case areas.

One potential area is efficiency. AI-powered tools can streamline processes by automating repetitive tasks—such as data entry, claims processing, and policy administration. This would free up employees to focus on more complex, value-added work and potentially reduce operational costs. 

Another promising area is customer experience. AI-driven chatbots, virtual assistants, and systems capable of personalized responses are being explored to enhance service delivery. These tools could analyze call transcripts and chat interactions, generating fresh ideas and providing insights to help agents perform better.

Lastly, there’s potential for accelerated development. Generative AI could speed up the creation of new product prototypes, identify market opportunities, and personalize insurance offers. It may also assist with code development, debugging, and testing—helping to bring products to market faster. 

These areas represent exciting prospects for the future, even as companies continue to experiment and validate their benefits. In 2025, we will see companies scaling generative AI to more complex challenges across the insurance company value chain:

• Sales & Marketing: AI assistants are set to reshape this area by personalizing marketing content and tailoring sales scripts. While content generation remains the primary focus, there’s also promising potential in enhancing lead generation and a better understanding of customer needs.
• Customer Engagement: AI is already being applied in sentiment analysis, conversational chatbots, and support assistants for both customers and employees. With several solutions in production, more projects are expected to deliver highly personalized customer experiences.
• Underwriting: AI has the potential to streamline underwriting by integrating diverse data sources for improved risk assessment and automating routine tasks. This could lead to faster, more accurate evaluations, quicker quote generation, and the development of customized pricing and coverage options.
• Claims: Fraud detection is emerging as a key area, with over half of EMEA insurers exploring AI for this purpose. Additionally, AI’s ability to extract and summarize data offers a promising way to manage the vast amounts of information flowing into insurance companies daily.
• IT & Data: AI is poised to make a significant impact on code development, with 94% of insurers expecting medium-to-high influence to drive automation and efficiency. Moreover, about 50% anticipate that AI will enhance customer and agent services by improving automation, personalization, and response times, thereby streamlining interactions with distribution partners.
  
  

Marko Sumina, Product Owner for Data Analytics at Adacta, added:

“AI in insurance is moving beyond experimentation to deliver real, scalable impact. Intelligent systems are transforming key areas—from personalized policy recommendations for policyholders to anomaly detection in claims, reducing fraud and improving accuracy. AI-driven claims automation is particularly vital, enabling faster processing, intelligent triaging, and more efficient settlements—leading to cost savings and better customer experiences. Additionally, clustering techniques are optimizing sales agent efficiency, while intelligent workflow automation ensures tasks are assigned to the right teams at the right time. Generative AI is also accelerating product innovation and IT automation, streamlining everything from policy creation to software development. In 2025, insurers that strategically embed AI across their value chain will unlock new levels of efficiency, personalization, and risk management while delivering a seamless, customer-centric experience.”

Revolutionizing Distribution Channels with Embedded Insurance

Insurance distribution channels are set for a significant evolution in 2025, with embedded insurance emerging as a major disruptor. While traditional channels remain important, opportunities like embedded insurance are expanding rapidly. At its core, embedded insurance integrates coverage directly into the customer journey—ensuring protection is available at the moment it matters most. For instance, insurance might be bundled with a car rental, but the concept extends to coverage for car-sharing users, cyber protection for SaaS customers, cancellation insurance in hotel booking apps, and even insurance for high-value retail purchases.

This innovative model reshapes distribution by making insurance more intuitive and accessible, aligning seamlessly with modern consumer expectations and building stronger customer relationships. However, unlocking the full potential of embedded insurance requires diverse ecosystems. In the embedded insurance ecosystem, collaboration is key. Insurers need to partner with digital platforms across industries—like automotive, real estate, and finance—to integrate insurance seamlessly into the customer journey. Working with technology providers that deliver robust APIs, microservices, and cloud infrastructure ensures seamless integration and a smooth, frictionless experience for customers.

Additionally, regulators, reinsurers, insurtech startups, and other stakeholders play a crucial role in ensuring effective data exchange and operational efficiency. Together, these collaborative efforts are set to redefine how insurance products are delivered, enhancing value for both insurers and customers.

Here are the key technology trends driving embedded insurance efforts:

• Mobile-first, digital-first. Insurers will continue to prioritize mobile devices and digital channels, focusing on user-friendly apps and interfaces for seamless interactions. The main challenges here will be how to integrate these experiences into other services and solutions.
• Virtual assistants. AI-powered assistants can handle queries, facilitate sales, process service requests, and support claims, enhancing interactions with embedded products. These are favoured by insurers because they can help customers along their journey.
• Just-in-time insurance. In this scenario, coverage is provided when needed for a specific event, often through on-demand, parametric, and pay-per-use models within embedded insurance frameworks.
• Cloud and API technologies. These enable seamless integration, scalability, and efficiency in embedded insurance through cloud infrastructure, APIs, and SaaS platforms. Embedded insurance is fully dependent on these technologies and any successful implementation requires an investment in them.

Cloud Computing: The Backbone of Digital Transformation

Many of these trends reflect the industry's digital transformation, with cloud computing serving as the main enabler. Cloud computing has the potential to transform the insurance landscape by supporting new, flexible business models while revolutionizing how systems are deployed, maintained, and scaled. Below are some key cloud capabilities and elements driving innovation and efficiency in the industry:

• Cloud Deployment & SaaS: Cloud-based systems transform insurance operations by shifting to a SaaS model, enabling automated and frequent core system upgrades that drive new business opportunities.
• Serverless Architecture: In a serverless model, cloud providers handle the infrastructure so developers can focus solely on coding. This setup allows for dynamic resource scaling and a pay-as-you-go cost model, optimizing both operational efficiency and costs.
• Containers: Containers are lightweight software packages that use fewer resources and launch faster than traditional virtual machines, streamlining development, testing, and deployment processes.
• Microservices: Microservices break applications into discrete, manageable functions that can be independently developed and scaled. They are essential for digital transformation, enabling self-service capabilities for policyholders.
• APIs: APIs serve as the connectors that integrate microservices within applications and with external systems, ensuring seamless collaboration and enhancing customer experiences, especially in scenarios like embedded insurance.

Looking ahead to 2025, hybrid and multi-cloud strategies in insurance are set to accelerate. As insurers move core systems from on-premises to public cloud implementations, a hybrid approach will likely emerge—keeping critical functions on private clouds while less sensitive applications run on public clouds. This strategy offers a balance between innovation and security, meeting the industry's need for agility and elasticity in a regulated environment.

Tomaž Bartolj, CPO at Adacta added:

“Cloud computing has become the norm in the insurance industry, driving efficiency and scalability, ensuring security and compliance, and serving as a foundation for digital transformation. Pay-as-you-go models reduce infrastructure costs, while cloud-based platforms enable rapid scaling and innovation. With robust security measures and strict regulatory compliance, cloud adoption enhances data protection and reduces cyber risks for insurers, especially as the industry becomes increasingly regulated. With cloud providers focusing on simplifying hybrid cloud adoption, insurers can seamlessly integrate cloud capabilities with on-premises and edge environments to meet regulatory and operational demands (e.g., data residency). At the same time, cloud is crucial for further digitalization, enabling trends such as AI, automation, predictive analytics, and advanced customer engagement tools. As a result, insurers see cloud computing not just as an option but as a necessity for staying competitive.”

Climate Risks and Natural Disasters: Anticipate and Manage Risks

Natural disasters are impacting more people each year, and when combined with inflation, they are placing significant strain on the insurance industry. In 2020, while global losses from natural catastrophes hit $202 billion, only $89 billion was insured—leaving a critical gap that exposes insurers to volatility and potential insolvency during major events. To counter these challenges, insurers are embracing digitalization to remove legacy friction, streamline operations, and enhance fine-grained risk management by leveraging detailed data. This approach not only helps mitigate risks but also enables the creation of custom, risk-informed underwriting models. Key climate technologies driving these changes include:

• Artificial Intelligence (AI): Used to assess and predict climate-related risks like severe storms and wildfires, while also streamlining claims processing and automation.
• Machine Learning (ML): Integrates diverse data sources to predict climate-related property risks and improve overall risk management.
• Quantum Computing: Offers promising capabilities for analyzing massive datasets necessary for accurate risk prediction and management.
• Internet of Things (IoT): Employs real-time sensors to capture environmental data, allowing insurers to dynamically assess risks and implement dynamic pricing based on actual conditions.

Growing Regulatory Pressures: DORA Goes into Effect

Insurance industry is facing a growing emphasis on regulatory compliance, particularly concerning data privacy and security. Regulatory bodies and government agencies are actively overseeing embedded insurance activities, establishing rules for insurance licensing, consumer protection, and compliance. For example, in Germany BaFin will intensify oversight of IT systems as exemplified by recent regulatory actions targeting startups and traditional insurers. All of this indicates a trend towards a focus on stricter oversight of insurance operations.

And then, there’s DORA compliance. The Digital Operational Resilience Act (DORA), which went into effect on 17 January 2025, introduced a regulatory framework for the financial sector, requiring measures to enhance cybersecurity, manage IT and communication technology risks, and strengthen digital resilience. And while insurers are expected to take significant action to comply with DORA, many may not be fully compliant by this date, with an estimated 60% meeting minimum requirements and only 5% fully operational.

The key areas to focus on are governance, ICT (information and communication technology) risk management, ICT third-party risk management, handling ICT incidents and testing digital operational resilience. 

Tatjana Rojc, CISO at Adacta commented:

“While DORA is certainly a compliance challenge, it also presents an opportunity to enhance operational resilience, which is increasingly important in today's data and technology-driven business environment. Successfully implementing DORA can improve a company's competitiveness and improve its reputation in the market.

The Digital Operational Resilience Act (DORA) introduces a standardized approach to cybersecurity, risk management, and regulatory compliance for financial institutions and their ICT providers, including insurance software companies. As regulatory scrutiny increases, aligning with DORA’s evolving framework is critical.

Key Compliance Trends:

• Holistic ICT Risk Management: Organizations must adopt a structured, end-to-end risk management framework, ensuring resilience against cyber threats and system failures
• Mandatory ICT Incident Reporting: Regulatory requirements demand standardized logging, classification, and reporting of ICT-related incidents, enabling rapid response and risk mitigation.
• Advanced Resilience Testing: Regular threat-led penetration testing (TLPT) and system assessments will be required to detect vulnerabilities and ensure compliance.
• Stronger Oversight on Third-Party Risk: DORA mandates stricter vendor risk management, ensuring that insurance software providers have clear contractual provisions and risk monitoring in place.
• Cyber Intelligence & Information Sharing: Increasing focus on collaborative threat intelligence to proactively mitigate cyber risks.