The Future of P&C Insurance: Navigating Change Through Technology and Strategy

by Rod Giess

The Future of P&C Insurance: Navigating Change Through Technology and Strategy

The property and casualty (P&C) insurance sector is navigating one of the most dynamic periods in its history. Powerful social, technological, economic, environmental, and political (STEEP) forces are reshaping the landscape. Whether dealing with customer expectations, regulatory changes, or disruptive technologies, insurers and Managing General Agents (MGAs) face increasing pressure to adapt, innovate, and grow.

Drawing on our significant experience supporting insurers through technology transitions, we will discuss the main dynamics for Inscos and MGAs in the P&C industry, how P&C organizations can respond effectively to ongoing change, and how they can position themselves for success in the years ahead.

Understanding the Key Drivers of Change

Several macro-level factors are converging to create unprecedented challenges and opportunities:

• Social: Digital-first customer expectations are now the norm. A generation raised on instant digital experiences expects similar transparency, personalization, and speed from their insurers. Research from Deloitte shows that 57% of Millennials would switch insurance providers for a better digital experience. 
• Technological: Advances in artificial intelligence (AI), blockchain, cloud computing, and the Internet of Things (IoT) are redefining underwriting, claims, and customer interactions.  While overall Insurtech investment declined somewhat in 2024 over prior years, early-stage funding rose 8.8% year-over-year from $1.12 billion in 2023 to $1.22 billion in 2024, with the overall deal size growing 14.6%. 
• Economic: Inflation, supply chain disruption, and labor shortages are driving up claim severity and affecting insurers’ bottom lines. According to the Insurance Information Institute (III), rising replacement costs in auto and property lines are leading to widespread rate increases.  . Although not every commercial real estate developer or retail homeowner agrees on the effects of tariffs – real estate development could be partially protected by long gestation times and access to wholesale hedging tools – overall, most expect prices to rise, with a concomitant slowdown in the market, according to real estate trade publication The Real Deal. 
• Environmental: Climate change is resulting in more frequent and severe weather events. The National Oceanic and Atmospheric Administration (NOAA) reported 27 weather disasters causing at least $1 billion in damages each in 2024 alone, just shy of the record 28 in 2023.   
• Political and Regulatory: Increased regulation—especially around cybersecurity and data privacy—adds new layers of complexity. For instance, the New York Department of Financial Services (NYDFS) Cybersecurity Regulation has become a model for other states considering more stringent compliance frameworks.

Understanding the depth and interconnectedness of these forces is critical for effective strategic planning.

A Taxonomy of the Types of Change Insurers Face

Insurers are not facing a single type of change but multiple, overlapping layers. It is useful to distinguish among them:

• Incremental Change: These are continuous small improvements, such as implementing customer portals or minor system upgrades. While essential, they often serve as maintenance rather than a path to growth. 
• Pragmatic Change: These are tactical responses to external demands, often regulatory in nature. The response to the California Consumer Privacy Act (CCPA) is a case in point. It requires changes in how insurers collect and manage personal data. 
• Customer-Centric Change: Designing services around evolving customer expectations is increasingly non-negotiable. Models like usage-based insurance (UBI) are becoming more mainstream, with a 40% adoption increase projected by 2026. 
• Radical or Disruptive Change: Fundamental shifts, often tech-driven, such as the entry of using AI and big data to enable instant underwriting and claims settlement.

Successful carriers will need to balance investment across all four areas, resisting the temptation to focus solely on incremental improvements.

Meeting the Challenge of Rapid Change

Traditional multi-year strategic plans are increasingly mismatched with market realities. Leading insurers are adapting to this challenge through:

• Agility First: Many carriers are adopting agile methodologies not just within IT departments but across underwriting, claims, and product development functions. Agile organizations can deliver change in smaller, faster increments, adjusting priorities dynamically based on customer needs and regulatory shifts. 
• Technology Modernization: Legacy systems are a significant barrier to agility. According to a 2024 PwC report, the majority of insurance executives cite legacy systems as their primary obstacle to innovation. Migration to cloud-based, modular platforms is becoming a critical success factor. 
• Data-Driven Decision Making: Insurers are increasingly investing in data science capabilities to move from reactive to predictive operations, optimizing everything from pricing to claims settlement. 
• Focused Core Competencies: Insurers are streamlining operations by outsourcing non-core activities, allowing greater focus on underwriting excellence, customer engagement, and digital innovation.

Central to all these initiatives is having adaptable, modern technology infrastructure, particularly in policy management, billing, and claims systems.

Creating Long-Term Opportunities Amid Disruption

P&C insurers that see disruption as an opportunity rather than a threat will be best positioned for long-term success. Growth opportunities include:

• Personalized Products and Services: Behavioral data allows insurers to move beyond demographic-based segmentation. Real-time data from connected devices (cars, homes) enables dynamic, usage-based pricing and hyper-personalized coverages. 
• New Coverage Areas: Risks such as cybersecurity, pandemic insurance, and parametric products (where payouts are triggered by a defined event) represent high-growth niches. 
• Ecosystem Strategies: Many insurers are forming strategic alliances with technology providers, data analytics firms, and other non-traditional players to offer bundled services or create entirely new platforms. 
• Operational Resilience: Building resilience goes beyond disaster recovery planning. It includes flexible staffing models, distributed infrastructure, and cybersecurity robustness.

Succeeding in these areas requires a combination of strategic clarity, operational agility, and technological capability.

Key Factors Shaping the Insurance Industry Through 2025 and 2026

Several trends are likely to have an outsized impact:

• Climate Change and Catastrophic Risk: Underwriting must evolve to address escalating catastrophe exposure. Traditional models based on historical loss data are proving inadequate. Companies are increasingly investing in climate modeling technologies and dynamic risk pricing. 
• Political and Regulatory Shifts: Changes in data privacy legislation (potentially at the federal level), new standards for AI explainability in underwriting, and stricter capital requirements are all possibilities over the next two years. 
• Economic Volatility: Inflationary pressures and recession risks will drive pricing changes, reinsurance costs, and could spur increased demand for certain coverages like unemployment and business interruption insurance. 
• Technological Maturity: Emerging technologies will transition from pilots to production environments. AI, blockchain for claims verification, and smart contracts in policy issuance will become standard operating procedures rather than experiments.

Insurers that embrace proactive scenario planning and continuous technological adaptation will have a distinct advantage.

AI’s Growing Role in Insurance

AI’s role in insurance is rapidly evolving from incremental process optimization to core business transformation. Significant developments include:

• Claims Automation: Insurers are deploying AI-powered platforms to manage FNOL (first notice of loss) submissions, automate routine claims adjudication, and detect potential fraud. 
• Predictive Underwriting: Leveraging alternative data sources—such as social media activity, wearables, and telematics—to enhance risk modeling and underwriting precision. 
• Customer Engagement: AI chatbots and virtual assistants are increasingly managing first-line customer service inquiries, enabling faster response times and greater customer satisfaction. 

According to Accenture, carriers that aggressively scale AI across their operations can achieve cost reductions of up to 40% and revenue growth of up to 15% over three years.

Future discussions will explore how insurers can responsibly govern AI usage and maintain transparency and trust with policyholders.

Next Challenge: Building the Foundation for a Competitive Future

As Wayne Gretsky, the world’s greatest hockey player, once said, “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”

The P&C insurance landscape will continue to evolve at a breakneck pace, shaped by shifting customer expectations, regulatory developments, environmental risks, and technological advancements.

Organizations that prioritize operational agility, data fluency, and customer-centric innovation—supported by scalable, modern policy management, billing, and claims systems—will be best positioned to thrive.

SpeedBuilder Systems knows that a flexible, modular, and cloud-native technology backbone is no longer a luxury for modern insurance companies, but rather a prerequisite for future success in this environment.

We focus on where the puck is going to be, not where it is.