As we move closer to 2025, insights from industry experts shed light on the emerging risks anticipated to redefine the insurance landscape, particularly in the realms of technology and climate change.
Navigating Technology Vulnerabilities
Paul Kottler, U.S. President of Crawford Global Technical Services, points out the escalating technological vulnerabilities within the insurance world.
Many companies struggle to merge new platforms with outdated legacy systems, making it crucial to address these risks head-on.
Kottler advocates for a forward-thinking strategy that transcends simple modernization, emphasizing the need to protect data integrity and boost operational efficiency.
Climate Change’s Economic Impact
According to Garret Gray, President of Global Insurance Solutions at CoreLogic, 2023 marked a pivotal year where severe convective storms inflicted more economic harm than hurricanes, a trend tied directly to climate change.
This increase in the frequency and severity of what were once considered secondary risks calls for a thorough, data-driven approach to risk management.
Such strategies are essential for insurers aiming to sustain profitability amidst ever-shifting weather patterns.
Nakita Devlin, CEO and Founder of RIC, believes that as climate challenges intensify, the insurance industry must become nimble in its responses to emerging threats.
She foresees an uptick in the popularity of parametric insurance, appealing not just to businesses but also to individuals and communities.
Startups and insurtech firms are leveraging technology to broaden their policyholder bases, thereby reducing concentrated risks and bolstering portfolio resilience.
Innovative Responses to Climate Threats
Brian Carey, Senior Director of Insurance Solutions at Equisoft, shares insights on the regulatory landscape for artificial intelligence.
He anticipates that while federal oversight may remain limited, states could adopt their own regulations.
This could significantly affect underwriting practices and address inherent biases within the industry.
Carey notes that while innovation is welcomed, some regulatory framework may be necessary if the insurance technology sector struggles to meet expectations.
Bethany Greenwood, Group Head of Specialty Risks at Beazley, emphasizes the importance for multinational companies to brace themselves for diverse regulatory frameworks emerging from various governments.
The differences in regulations could pose significant operational challenges and inflate compliance costs, highlighting the need for strategic management.
Mike Allee, President of UCT, warns that as embedded AI technologies proliferate, firms will face expanded challenges related to data readiness.
Life insurers are keen to integrate AI into their digital offerings; however, the success of these ventures hinges on sourcing and preparing data effectively.
Katie McGrath, CEO of North America at Swiss Re Corporate Solutions, underscores the importance of robust risk mitigation and adaptation strategies.
With climate change intensifying hazards and losses, it’s crucial for businesses to understand and prioritize these risks for effective management.
Jason Kaminsky, CEO of KWH Analytics, observes that with fresh political leadership, the economy—and sectors such as cryptocurrency and AI—are positioning themselves for rapid growth.
While natural gas will continue to play a vital role, solar energy and energy storage are expected to remain essential components of future demand.
Coleman Johnson, SVP and Chief Underwriting Officer at The Mutual Group, identifies several key issues set to dominate industry discussions by 2025, including PFAS concerns, human trafficking, cybersecurity threats, and the handling of biometric data.
He highlights the ongoing difficulties posed by climate change and the pressures of social inflation on casualty insurance.
Jeff Gill, EY Americas Insurance Sector Leader, asserts that insurance firms must bolster their resilience to effectively tackle evolving risks.
New regulatory measures, like the Cybersecurity Regulation from the New York Department of Financial Services, will compel companies to enhance their security protocols to protect data and remain compliant.
Predicting the growing importance of AI governance, Ken Hugendubler, Principal at Baker Tilly, emphasizes that regulating these technologies will become a central theme for the insurance sector.
Regulatory bodies are likely to concentrate on ensuring fairness, security, and accuracy in the AI models that companies leverage.
Rachel Bush, VP of Information Risk Governance at Nationwide, highlights that companies reliant on third-party vendors can complicate their risk profiles.
Such dependencies may undermine resilience and amplify vulnerabilities, particularly regarding cybersecurity.
Andy Logani, Chief Digital Officer at EXL, notes that insurers are finding a delicate balance between innovative practices and the necessity of solid long-term risk management.
Major challenges anticipated for 2025 will revolve around climate risks and supply chain disruptions arising from various ongoing crises.
Todd Greenbaum, CEO of Input 1, observes that the insurance industry is undergoing a substantial digital transformation.
Forward-looking carriers are beginning to explore “Trust-as-a-Service” models, emphasizing transparency as a core value.
For the industry to thrive, it must prioritize empathy, offer personalized solutions, and establish lasting trust with its clients.
The insurance sector in 2025 will be profoundly impacted by technological advancements and climate change.
Companies must adopt a proactive stance in risk management and compliance.
As they strive to keep pace with client expectations, innovative strategies—ranging from AI utilization to alternative insurance models—will be crucial in shaping the future of the industry.
Source: Dig-in
