Experts Weigh In: The 3 Biggest Challenges Facing Insurance Industry in 2025

According to Accenture, inadequate claims experiences could jeopardize up to $170 billion in premiums. This finding comes from a comprehensive survey involving 6,700 policyholders across 25 countries, over 120 claims executives in 12 countries, and more than 900 US-based underwriters.

Policyholders are one of the most valuable assets in the insurance industry, yet claims processing has often been a source of frustration for them.

Each claim is a critical “moment of truth,” where the promise of coverage is tested and transformed into tangible support. This creates a paradox: while neither customers nor insurers want claims to arise, when they do, their resolution becomes crucial for both parties. Policyholders want fast resolutions, clear communication about their claim status, and, ideally, a personal touch. Meanwhile, insurers prioritize efficiency and accuracy, aiming to mitigate risks related to fraud. When the claims process breaks down, it results in lower customer satisfaction and higher operational costs, underscoring the true cost of a poor claims experience.

Looking through an analytical lens:

• Speed and accuracy: Balancing speed and precision is essential in modern claims management. As noted in the Insurance Journal, global insurers are increasingly using AI chatbots and generative AI in claims resolution processes, underwriting, and customer fulfillment.
• Customer-centric metrics: Metrics like resolution time and customer satisfaction are vital for identifying inefficiencies. Accenture reports that AI can deliver faster, personalized experiences, improving claimant satisfaction and optimizing underwriting processes.

Protecting an industry built on trust becomes increasingly difficult when deception hides at every corner.

Insurance fraud costs the industry billions annually, and contrary to popular belief, companies do not simply absorb these losses. The financial deficit created by fraud translates into higher premiums. Thus, an average American family pays an additional $400 to $700 each year, according to the FBI. 

The situation is particularly alarming in the UK. Recent reports indicate that nearly one in ten people fell victim to fraud from 2021 to 2022, indicating that the country is facing a “fraudemic.”

While the challenge is pressing, the obstacles are numerous. According to Deloitte, limited information sharing and problems with data quality hinder effective fraud detection efforts. Many insurers operate in silos, leading to fragmented data that makes it difficult to identify patterns of fraudulent behavior.

As insurers embrace digitization, the stakes in cybersecurity have never been higher. According to IBM, the global average cost of a data breach in 2024 reached $4.88 million, marking a 10% increase over the previous year and the highest total on record. This alarming rise highlights the financial and reputational risks posed by cyber threats in an increasingly digital-first world.

Munich Re's Cyber Insurance: Risks and Trends 2024 report echoes these concerns, revealing that 87% of global decision-makers believe their organizations are inadequately protected against cyberattacks. As cybercriminals grow more sophisticated and technologies like generative AI and cloud computing evolve, insurers need to take proactive measures to address the expanding threat landscape.

Cybersecurity is no longer just a technical issue — it’s a cornerstone of modern risk management and customer trust. Insurers that prioritize robust, forward-thinking cybersecurity measures will be better equipped to navigate the challenges of 2025 and beyond.

As the insurance industry navigates the complexities of 2025 and beyond, addressing these three challenges — efficient claims management, robust fraud detection, and enhanced cybersecurity — is imperative. The stakes are high, with financial implications not just for insurers, but for policyholders who shoulder the burden of increased premiums and diminished trust.