Forrester's predictions for the insurance industry in 2025 include:

Growth in usage-based insurance will raise Customer Experience Index (CX Index) scores by at least one point. In 2024, auto and home insurers' CX Index scores fell in the U.S. and Europe. Less than half of customers in those markets say that insurance is worth the price.
Embedded insurance will grow by at least 30%, predominantly in personal lines.
Tech spending will rise by 8% year over year. Over one-third of insurers will increase spend on super apps, omnichannel experiences, and claims management systems.
Fewer than 5% of insurers will reap tangible, direct AI gains. Adopting and implementing real-time AI/genAI capabilities and applications lags behind other items like improving data and analytics technology usage.
At least five carriers will exit the auto insurance market. There have been notable shifts in auto claims severity (up by 20%) and frequency trends (down by 3%) due to technological advances in vehicles and the increasing influence of plaintiffs' bar, leading to social inflation.

"In the coming year, the industry must move from 'react and repair' to 'predict and prevent' and explore nontraditional distribution channels," Forrester said. "Advanced analytics, AI, and automation technologies can significantly improve operational efficiency, increase accuracy in underwriting, and optimize claims management. But technology in the service of the bottom line is only a good tactical move; it's a better strategic choice when it serves the customer's experience."

Special Reports /

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