The life insurance industry continues to navigate a complex set of interrelated challenges that are reshaping strategy and priorities. Persistently low or volatile interest rates remain a key constraint, complicating product design and profitability—particularly for long-term commitments such as annuities versus life insurance. Meanwhile, total policy volumes are declining even as average policy sizes grow, reflecting a shift toward more affluent buyers and leaving key market segments underserved. This imbalance raises concerns around inclusivity, growth, and long-term relevance, while the rising cost to serve a shrinking policy base puts additional pressure on carriers to reduce cost per policy. Operational efficiency has therefore become a central focus, as insurers seek sustainable ways to modernize, streamline operations, and better align offerings with evolving market dynamics.
Over the past decade, innovation largely centered on customer acquisition and rapid digital expansion. Today, the emphasis is shifting from growth at any cost to transformative efficiency. Rising expenses, tightening margins, and affordability pressures are prompting carriers to rethink how they operate across the entire value chain, balancing accessibility, underwriting discipline, and service excellence for a cost-conscious customer base.
At the center of this transformation is artificial intelligence. The rapid rise of generative and agentic AI is enabling capabilities far beyond simple automation. For life insurers, these technologies are streamlining underwriting, accelerating claims and policy administration, anticipating emerging mortality and longevity risks, and helping close coverage gaps. By leveraging AI in these ways, the life insurance industry is positioned to move from incremental improvement to transformational growth—reshaping how protection is delivered in a world defined by complexity, uncertainty, and opportunity.
In Q4 2025, the industry’s attention is squarely on leveraging technology to achieve efficiency at scale. The goal is clear: to build a more agile, scalable, and responsive life insurance industry capable of extending meaningful protection to a broader audience while keeping costs under control.
Celent has identified five major trends driving this strategic transformation. These themes, outlined in our 2025 Previsory, are shaping the research agenda for the year ahead
We believe this is a critical moment for the industry, defined by clarity of purpose around sustainable growth, smarter technology investment, and ecosystem collaboration. The hard-earned lessons of recent years are being transformed into actionable strategies that will define the next era of insurance innovation.
However, there are still significant hurdles to overcome. Achieving scalable digital transformation requires major investments in data management, governance, and integration. Insurers must ensure that the right infrastructure is in place to support the intelligent use of emerging technologies. Simultaneously, workforce dynamics are shifting. Experienced professionals across key functions are retiring, creating both talent gaps and knowledge transfer challenges. Replacing these experts with a new generation of employees—and equipping them with the tools and institutional insights they need—is essential for long-term efficiency and resilience.
In 2025 and 2026, Celent’s research will explore how insurers can use technology not just to keep pace with change, but to lead it. From evaluating new tools and vendors to shaping strategic plans and execution roadmaps, we’re committed to turning thought leadership into practical guidance. There is significant headroom for innovation this year—and we’re excited to partner with you in unlocking its full potential.
