FORECAST 2025:
Impactful Forces
FORECAST 2025: Impactful Forces
Author
January 2025
Evolving technology, regulatory pressure and economic factors are among the top trends that industry executives are monitoring this year. The war for talent, customer expectations and culture change also are among their top concerns.
Technological Change
The pace of technological change will continue to have a significant impact on the insurance and financial services industry. “Certainly, technology has an evolving and increasingly powerful impact on the ways we live, work and maintain relationships — with people, with products and with brands,” says Sarah Mineau, SVP, Life/Health & Investment Planning Services, State Farm Insurance. “Further expansion of digital capabilities and advancement of artificial intelligence (AI) capabilities will continue to impact organizations, industries and society. These technologies can help empower customers, simplify the complex and make it easier to act confidently on needs.”
Technology and AI are dramatically changing the life insurance industry in a number of ways, from enabling faster and more accurate underwriting processes to improving customer service through automation. “While there are a number of trends that could impact our entire industry, we do expect technology and AI to have the greatest impact on the market overall,” says Virgil Miller, President, Aflac U.S., Aflac. “Adoption of Tech/AI will begin to transform customer service, data analytics, financial advice and productivity/profitability,” concurs Jasmine Jirele, President & Chief Executive Officer, Allianz Life Insurance Company of North America.
“AI, technology, talent and culture will remain at the forefront of driving change for NFP in the years ahead,” says Mike James, Global Chief Sales Officer, NFP, an Aon company. “On the AI front, we’re just scratching the surface. We have turned the corner from AI being a cool wizard to it being an essential part of our business. It’s currently driving efficiency, allowing employees to be even more productive. In the coming years, it will inform strategic decisions, validating assertions and highlighting gaps, while helping us deliver more value to clients as they face more complexity in achieving their goals.”
Bob Jurgensmeier, Chief Executive Officer, Ameritas Life Insurance Group agrees. “Advancements in technology and AI will accelerate the shift to digital self-service for agents and customers and continue changing how the industry works as systems are modernized and AI walks alongside the workforce in accomplishing tasks.”
Almost all of the executives mentioned the significant impact that AI in particular will have on their organization and the industry. “As we establish a clear roadmap for Protective’s future, we are focused on both managing expenses and investing in initiatives that fuel growth and enhance the overall employee and customer experience,” says Wade Harrison, EVP & Chief Retail Officer, Protective Life. “A key part of this involves leveraging innovative technologies, such as AI and digital tools, to improve customer experiences and operational efficiency.”
“Accelerated digital transformation can enhance Prudential’s operational efficiency, customer experience and product innovation,” says Caroline Feeney, EVP & Chief Executive Officer, U.S. Businesses, Prudential Financial. “The continued usage and progression of AI and machine learning can improve risk assessment, underwriting and claims processing. With increased digitalization, the importance of robust cybersecurity measures will grow, necessitating significant investment in protecting sensitive data.”
Marc Giguère, President & Chief Executive Officer, Munich Re, U.S. Life and Health, agrees that digitization and productivity improvement in the insurance ecosystem remains a focus. “Over the past few years, we’ve gotten a glimpse of the value a more frictionless underwriting environment can bring. Finding the right balance between innovation and business integrity is key,” says Giguère. “The ability to ingest and process data is changing the way we work and assess risk, but we will need to ensure that data is protected, and we trust the results.”
Legislative Hopper
Legislative initiatives are always top of mind in the C-suite, given that insurance and financial services companies are among the most highly regulated companies in the world. Jirele says, “continued regulatory change and convergence of asset management and life” will continue to have an impact over the next two years.
“Regulatory and public policy trends can have a material impact on the company and business strategies and the long-term economics of our business and financial solutions,” says Feeney. “Specifically, changes to regulations related to consumer protection, data privacy and financial stability. Other trends that would impact the company are growing regulator expectations for responsible use of new technology data.”
Economic Climate
Beyond regulation, executives also mentioned the substantial impact of inflation and interest rates. “We expect the path taken on interest rates to be a key driver of both sales volumes and achievable margins on our in-force life and annuity blocks,” says Jurgensmeier.
“Persistent inflation and fluctuating interest rates can affect investment returns, insurance product pricing and consumer purchasing power,” says Feeney. “Prudential may need to adjust its strategies to manage these economic variables. Additionally, the pace of economic recovery will impact consumer confidence and spending, which in turn affects the demand for insurance and investment products.”
“Economic growth, labor markets and inflation will influence monetary policy, which will determine interest rates and the overall effects on the equity markets,” says Jerry Lyphout, President & Chief Executive Officer, Modern Woodmen of America. “These are major financial drivers for our organization and macro drivers for the industry.”
“Prolonged periods of low interest rates can challenge Prudential’s ability to generate returns on fixed-income investments, which are a significant part of our portfolio,” says Feeney. “Conversely, rising interest rates can affect the valuation of bond portfolios and impact the cost of borrowing. Increased volatility in equity markets can impact Prudential’s investment strategies and the performance of products linked to market indices.”
Culture Matters
As the competition among organizations to attract and retain top talent heats up, executives say offering a flexible work environment, attractive benefits and a great company culture are essential. “The competition for top talent, especially in technology and data science, will be aggressive,” says Feeney. “Prudential will need to continue to offer attractive benefits, flexible working arrangements and career development opportunities. Emphasizing a positive and inclusive workplace culture will be crucial in retaining talent and fostering innovation.”
According to Harrison, Protective Life is committed to fostering a culture that embraces change and supports its teammates. “By prioritizing talent development, engagement opportunities and workplace benefits, we aim to create an environment where our employees feel valued and supported to thrive amidst change,” he says.
Talent and culture are also priorities for NFP, an Aon company. “They go hand in hand,” says James. An outstanding culture attracts top talent, and exceptional employees are critical to continuously advancing that culture. Key to our efforts is delivering an employee experience driven by well-being, belonging and impact. We believe that when our employees are at their best, both physically and mentally, feel welcome within our organization, and are empowered to make a difference for stakeholders, they are going to deliver meaningful value to our clients.”
Customer Support
Many executives mentioned that changing customer expectations will greatly impact the industry in the next two years. “Consumer expectations — and agent/advisor expectations — have evolved rapidly since the onset of the pandemic,” says Aaron Ball, EVP and Co-Head of the Foundational Business, New York Life. “We are making significant investments in modernizing our digital engagement model across most aspects of the agent and client experience, including investments in the way we support recruiting and onboarding new agents, prospect for new clients and support the purchase and service experience.”
Some executives also mentioned the increased demand for financial planning and annuities as having substantial impacts moving forward. “I believe that consumer demand for comprehensive financial planning will continue to accelerate in the years to come,” says Kamilah Williams-Kemp, EVP & Chief Product Officer, Northwestern Mutual. “People want a plan that helps them to protect what they’ve already built while also creating future prosperity.”
Feeney agrees, “The increasing global demand for retirement product, solutions and advice, is another key growth trend. This year, historic levels of Americans will turn 65. At the same time, 55-year-olds will enter the crucial decade before retirement in preparation for life after work. These aging demographics will result in an estimated $137 trillion retirement opportunity in the U.S. and $26 trillion in Japan by 2050.”
