The life insurance industry is grappling with a number of interrelated challenges that are reshaping strategy and priorities. Persistently low—or volatile—interest rates continue to complicate product design and profitability, particularly when weighing the long-term commitments of annuities versus life insurance. At the same time, while the total volume of life insurance policies sold is declining, average policy sizes are growing, signaling a shift toward more affluent buyers and leaving key market segments underserved. This imbalance raises concerns about inclusivity, growth, and long-term relevance. Compounding the issue is the rising cost to serve a shrinking policy base, placing pressure on carriers to reduce the cost per policy. As a result, operational efficiency has become a critical area of focus in our research agenda, as insurers seek sustainable ways to modernize, streamline, and better align their offerings with evolving market dynamics.
The innovations of the past decade largely revolved around customer acquisition and rapid digital expansion. But in today’s environment, insurers are recalibrating. The emphasis has shifted from pure growth to operational efficiency. Rising costs, tightening margins, and affordability concerns are prompting carriers to rethink how they operate across the entire value chain. The challenge is clear: how to offer accessible, affordable products while maintaining strong underwriting discipline and delivering exceptional service to a cost-conscious customer base.
In 2025, the industry’s focus is squarely on achieving transformative efficiency. Insurers are increasingly turning to advanced technologies—particularly artificial intelligence, including the fast-maturing generative AI and large language models—as well as process automation, low-code development, and straight-through processing. These tools are being deployed not just to modernize, but to compress timelines, reduce manual effort, and eliminate friction at every step of the insurance process. The vision is to create a more agile, scalable, and responsive insurance industry—one that can extend meaningful protection to a broader audience without inflating costs.
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, 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.
