Trends shaping the insurance industry in Europe in 2025

Like previous years, 2025 brings both challenges and opportunities that shape the priorities of the European insurance industry. As insurers strive to modernize, they need to navigate around new regulations, growing customer expectations, dizzyingly fast-paced technological advancements, and increased impact of natural disasters, among others.  

From a regulatory point of view, the insurance sector in the EU is finalizing this year its preparations to comply with the Digital Operational Resilience Act (DORA), following the early 2025 deadline.

When it comes to technology, major insurers are already exploring LLM-powered chatbots and other GenAI applications, which take the digitization of insurance companies to a whole new level.  

In this blog, we summarize the main trends in the insurance industry in 2025 based on insights from our experts, as well as reports released by thought-leading consultancies. 

The insurance sector’s transformation to a digital-first approach has long been challenged by high-security processes, such as due diligence, KYC, and authorizations that traditionally favor in-person interactions and paper-based documentation. Additionally, insurance brokers, who often follow more traditional practices, further complicate the digital shift within the sector.  

In an international survey of over 20 insurance leaders about what is shaping the industry, the majority cited factors related to digitalization, data-driven insights, (Gen)AI, and working in the cloud. The insurance industry in Europe, however, is still in the early stages of digitization, as one of the more risk-aversive industries within financial services.   

Fortunately, insurers don't need to reinvent the wheel when it comes to digitization. First and foremost, there are a variety of advanced digital identity tools that insurers can seamlessly integrate to securely conduct KYC/AML due diligence, such as EU-based itsme^®. This eliminates the need for physical evidence or in-person presence to create an account, submit a claim, provide a qualified signature, or update personal details. We explore other major technological trends that insurance companies are increasingly exploring later in this blog. 

Insurance companies are also already exploring possibilities with GenAI and LLMs to modernize and digitize their efforts. Examples of such applications include:  

• Using AI-driven automation to analyze claim descriptions, medical reports and policy terms more quickly and efficiently. This also helps in detecting fraudulent claims by analyzing patterns and inconsistencies in the language and images found in submitted documents. 

• Relying on GenAI-powered chatbots to handle customer inquiries, policy renewals, and claims tracking.  

• Relying on Gen AI–powered copilots to support agents and other salespeople to improve and personalize their customer support based on customers’ details. 

Insurance companies are facing shrinking profit margins due to different macroeconomic factors, from rising inflation to declining interest rates. Insurance companies' bottom lines are also experiencing significant losses due to the increasing frequency of natural disasters linked to climate change. For instance, the 2021 flooding in Wallonia in Belgium resulted in insured losses of approximately €2.07 billion. 

To become more resilient in the face of those fluctuations and to grow their margins, some insurers are moving to “re-engineer their value chain as a set of digital services” that are modular, agile and portable. They are switching to an ‘Insurance as-a-service' (IaaS) approach with the help of specialized API-based platforms to integrate their products and services within other insurers, Insurtechs and other third-party distributors/platforms. This supports the already-present concept of embedded insurance, whereby insurance is embedded within or sold with the original product at the point of sale.  

As insurance companies strive for accessibility for clients, however, one big challenge that arises is the need to adhere to all KYC/ AML requirements without disrupting customer onboarding. While this is by no means an easy task, insurance companies can easily rely on itsme^® or similar digital identity solutions to remotely fulfill identity verification and authentication requirements, all the way to providing legally recognized e-signatures.  

Failing to provide today's customers with seamless digital experiences can mean quickly losing them to competition, especially with the shrinking gap between insurance customers who prefer online vs. in-person interactions.   

A report by EIOPA showed that among European insurers, digital-only distribution channels still lag well behind physical or hybrid ones, such as phone calls, emails and face-to-face meetings. For instance, it is not uncommon for clients to be asked to send physical documents by mail to process a claim (such as signed doctor's reports, paper application forms, or passport scans). This is mainly due to the outdated verification methods that insurance companies rely on to conduct due diligence.  

Moreover, most traditional insurance platforms do not give customers control over their insurance products. They focus instead on customer support and claims management, rather than allowing users to easily adjust their coverage, update policies, or customize plans in real-time.  

Insurance leaders already know well the importance of enhanced customer service. According to a PwC survey, 80% of insurance CEOs embedded customer satisfaction metrics in their long-term corporate strategy. A report by Strategy& showed that enhanced customer experience is the first outcome that 6 European insurance leaders seek from their digital transformation.  

As shared earlier, LLM-powered customer support chatbots, conversational AI integrations and Natural Language Processing (NLP) can help automate claims processing and speed up processes related to interpreting inquiries and customer due diligence. Moreover, cumbersome practices around identity and claim verification can become fully digitized with the help of digital identity platforms, cutting the time it takes to conduct KYC from days to seconds.  

While transforming to a digital-first customer experience requires big investment and commitment from insurers, it is surely worth it. According to McKinsey, insurers who move from the bottom quartile to the top in customer experience can witness up to a 30% increase in the rate of winning new business and a 20% to 30% reduction in policy cancellations. 

Insurance companies increasingly recognize the need to replace paper-based work and siloed databases with a single-source-of-truth of data (on-premises or in the cloud).  

The shift to a more data-driven way of working plays a major role in helping insurers enhance their data accuracy and quality, comply with regulations such as GDPR and DORA, protect themselves against cyber threats and breaches, personalize customer service with advanced analytics and insights, and save on operational costs. For instance, insurance leader AXA in Belgium migrated their work to the cloud, enhancing customer service, agility and cost transparency. 

Unfortunately, many challenges lie ahead of insurers as they try to become more mature around their data. For instance, the data of many clients lies with brokers, who often maintain incorrect customer data, leading to cleanup initiatives by insurance companies.

Fortunately, insurers can get a head start when it comes to storing and managing their user data by relying on a myriad of specialized platforms. An example is digital identity platforms, such as itsme^®, which can help insurers digitize customer verification, authentication and consent management while ensuring regulatory compliance, enhancing data security, and facilitating seamless customer interactions.