Where to invest in insurance in 2025?

The end of 2024 looks like a pre-apocalypse.

International conflicts, fears linked to Trump's return to the White House, French public debt at 3,000 billion euros (115% of GDP), inflation persisting at 3.5%, and an expected economic slowdown in France. Natural disasters have topped the 100 billion dollar mark in claims for the fourth year running. Insurance fraud is soaring (+18.3% in 2023), reaching €695 million.

The instinctive response of the insurance industry would be to fall back on what it has achieved. But that would be a mistake. Turbulent times are conducive to the emergence of new leaders. Amazon was founded during the recession of 1994, Airbnb during that of 2008. Why is this? Because constraints force creativity.

This article identifies three critical areas of investment for 2025. Not marginal adjustments, but fundamental transformations that will define the leaders of tomorrow.

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Facilitating access to risk-carrying capacity

The risk-carrying landscape is in a state of flux. While overall insurance capacity is up 10% on 2023 (WTW, 2024), this statistic masks a more complex reality: access to risk-carrying has become extremely heterogeneous, depending on the business line and the size of the company.

Some sectors, such as healthcare, are particularly hard hit. With pivot rates of over 10%, the number of players in the supplementary health insurance sector is continuing to concentrate, with 75% of them leaving the sector compared with 2001 (DREES 2023 report).

This exodus of risk carriers is further accentuated by the recovery in the financial markets, which is enabling insurers and reinsurers to obtain better returns elsewhere. The result? We now need to generate more margin to encourage risk carriers to take on new programmes.

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Our conviction: the market will inexorably move towards more and more co-insurance and collaboration. Rather than seeing each other as competitors, insurers could work together to maintain their market share. This practice is spreading rapidly in certain lines of business, such as industrial risks and renewable energy. It enables portfolios to be diversified and risks to be mitigated. By working together, complementary players can maintain capacity and better control risk: one insurer can contribute its balance sheet strength, the other its technical or operational expertise.

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Conclusion: as an industry, we need to invest massively in solutions that will give us greater flexibility and responsiveness in the allocation of risk-carrying capacity. The players who know how to orchestrate these multiple partnerships effectively will be the big winners of tomorrow.

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Reducing operating costs: a question of survival

Rising claims costs and inflation are jeopardising the very foundations of our models. The transfer of healthcare costs from the public to the private sector is the most striking illustration of this: +858 million euros for procedures performed by healthcare professionals alone in 2024 (Senate, 2024). The problems of purchasing power, accentuated by the increase in taxes that will result from the public debt, mean that the solution can only be found by increasing the price of insurance. We need to cut costs.

With a combined non-life ratio of 98.5% in 2023 and a forecast of 98.7% for 2024 (Institut des Actuaires), the French sector lags significantly behind the Nordic countries, where ratios are below 90%, and our European neighbours, who have stabilised at 95%.

Transforming our operations is no longer an option, it is an immediate necessity. Players who do not tighten their costs will have to deal with an unsustainable combined ratio, because policyholders will not be able to pay more in this economic climate. They will be able to continue to underwrite and manage policies, but will have to carry out brutal revaluations in 2026-2027, which will put them out of the market. Optimisation must be achieved in terms of management and distribution, but also in terms of the insurer's internal costs.

Fortunately, the levers for optimisation exist. Artificial intelligence promises to reduce operating costs by up to 30% (McKinsey, 2024). Cloud computing, already adopted by 91% of French insurers, is 40% more profitable than traditional systems (Capgemini, 2024). What remains is the migration to SaaS rather than bespoke software - which is still in its infancy in this industry.

But automation is only part of the equation. Optimisation in 2025 will have to be multidimensional. It will start with the fundamentals: eliminating duplication in your CRM to avoid wasting your teams' daily time, systematically reviewing your guarantees to identify areas of friction. It will then go through your processes: reinforcing risk prevention, automating what does not bring value to your customers. It will culminate in the transformation of your external relationships: renegotiate intelligently with your ecosystem of partners, optimise your distribution channels.

The race for efficiency is on. The players who know how to combine intelligent automation with traditional optimisation will be best placed to absorb the shocks of the future.

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Organising your data and data management for LLMs

70% of business leaders anticipate a major transformation through generative AI in the next three years (PWC, 2024). However, its implementation remains complex: only 25% of companies consider their data governance practices to be mature (Covéa, 2024), and 77% fear data loss as the main risk (Archimag, 2024). The gap between ambition and reality has never been wider.

Technological solutions do exist, however. Semarchy is already working with APRIL to reduce fraud by providing a 360° view of the customer, while Stibo Systems offers data management solutions specialising in insurance. In fact, 36% of companies are already working on concrete AI use cases (Covéa, 2024). The revolution is upon us and everyone will have access to the technologies.

However, only players who have invested in the organisation of their data from 2025 will be able to benefit.

Without rigorous data organisation, even the best AI tools will remain under-exploited - and your competitors will gain a head start that will be hard to catch up with. Mapping your data sources (CRM, claims management, billing), identifying and eliminating duplicates, standardising formats, enriching metadata to prepare for exploitation by LLMs, merging the various independent systems, etc. these are our priorities.

Regulatory compliance adds a layer of complexity. RGPD, NIS-2 (September 2024), CSRD: each new regulation imposes its own data requirements. But compliance shouldn't be an excuse. It's a constraint that needs to be addressed, and we still need to move fast.

The other real investment is not technological. It's human.

The transformation towards a Data culture represents a profound paradigm shift. Data is no longer seen as the preserve of IT, but as a responsibility shared by everyone. Every team, every employee is becoming a producer and consumer of data. This cultural transformation will take time - probably several years - and will require constant commitment from management.

The AI race is on, and only players who have invested in preparation will be able to take part.

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Conclusion: Daring to invest during a downturn

The end of 2024 looks like a perfect storm: record debt, geopolitical tensions, an explosion in cyber attacks. Faced with these challenges, most insurers are retreating into the past. This is a mistake.

The winners of 2025 will be those who dare to transform their model now. Co-insurance, overhaul of operational processes, data culture to prepare for AI, reinvented claims: the levers have been identified. In a shrinking market, now is the time to innovate. Tomorrow's dominant positions are being built today.

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