Should insurers spend 2025 thinking about how to prepare for another Hurricane Helene?

In 2024, Hurricane Helene unleashed devastating floods and winds in North Carolina and Georgia, regions that are hundreds of miles from the coast. The mountains that once seemed to shelter this rural area instead channeled water into communities never built to withstand hurricane-force conditions.

This kind of unexpected event typically tests the insurance industry’s approach to risk assessment.

Yet, insurance companies aren’t likely to overhaul their sophisticated risk models and technologies in 2025 — they can’t alter decades of proven practices for statistical outliers, even devastating ones. Rewriting risk models because of the impacts of one unprecedented storm could compromise decades of acquired wisdom.

This highlights a broader truth about insurance in the coming year: Fundamental principles matter more than ever.

A mass exodus of expertise

The insurance industry faces a more profound threat than extreme weather: a mass exodus of expertise. Veteran professionals who have spent decades refining their judgment are retiring.

According to the U.S. Bureau of Labor Statistics, the number of insurance professionals age 55 and older has increased 74% in the last 10 years. It’s estimated that over the next 15 years, 50% of the current insurance workforce will retire, leaving more than 400,000 open positions unfilled.

As a result, the industry is embracing artificial intelligence (AI) and advanced analytics.

However, insurance companies aren’t chasing AI to replace human decision-making. They’re racing to capture and replicate the expertise of their most experienced underwriters, claims adjusters and risk assessors before it walks out the door. This digital shift is also driven by changing customer demands.

Consider how underwriting is evolving. AI algorithms are being developed that study the decision patterns of veteran underwriters, helping new professionals access decades of accumulated wisdom. When a junior underwriter faces a complex case, AI can help them understand how experienced professionals have handled similar situations in the past. This preserves institutional knowledge while accelerating professional development.

Customer service, where expectations vary dramatically by market segment, is also leaning into this transformation. Personal lines insurance customers, particularly those under 40 years old, demand instant digital service. They’re not looking for long-term relationships with agents; they want to secure coverage in minutes through their phones with seamless claims submissions through mobile apps.

In some commercial insurance lines, complex risk scenarios and complicated claims require significant human interaction. AI-powered systems can help route claims to the right specialists quickly while automated tools handle routine situations. This lets insurance professionals focus on the strategic decisions that really matter.

Why playing it safe might be the boldest move in 2025

An uncertain economic environment heading into 2025 creates pressure for dramatic changes. Rising claims cost inflation (both financial and social), fluctuating interest rates and political shifts might tempt insurance companies to overhaul their approach.

Yet, in an industry built on managing risk, it can be dangerous to overreact to periodic changes.

Most property and casualty insurers don’t typically profit from their underwriting operations — rather, they operate profitably based on investing well. This makes them vulnerable to economic volatility in terms of liquidity needs arising from duration risks in their investment portfolios. It is tempting to chase higher returns or dramatically revise risk models during uncertain times, a temptation that needs to be carefully evaluated.

Leading insurers recognize this paradox. They're developing multiple contingency plans while maintaining their fundamental practices. This way, they can adapt without abandoning the principles that have long underpinned successful risk management.

Insurers will need to maintain the right balance between people and technology if they want to be successful in 2025. Technology should enhance rather than replace human judgment. Risk assessment must adapt to changing patterns while filtering out statistical noise. Customer service can be instant without being impersonal. The most successful insurers won't be those chasing every new trend — they'll be the ones using new tools to strengthen time-tested principles to drive sound strategic plans.

How successful insurers will navigate 2025

Following the Great Fire of London, fire insurance companies developed minimum underwriting requirements to mitigate their risks. These underwriting standards became the genesis of modern-day building codes as they created practical solutions to manage risk. That same pragmatic mindset serves the industry well today. As we look toward 2025, successful insurers will:

• Build technology around expertise, not the other way around.
  
• Use AI to capture and scale veteran knowledge, making it available throughout their organizations.
• Create knowledge transfer programs that pair experienced professionals with new talent before retirement.
• Design systems that automate routine tasks while quickly connecting complex scenarios to human experts.
• Invest in cybersecurity alongside new technology, making it part of product development rather than an afterthought.
• Focus on predictable risk patterns rather than overreacting to outlier events, no matter how dramatic.
• Build flexibility into risk models without compromising fundamental assessment principles.
• Develop multiple contingency plans without abandoning core underwriting principles and sound financial discipline.

How Wipfli can help

In 2025, insurance companies should look to preserve decades of expertise while meeting modern customer demands. The successful transition will require both deep industry knowledge and technological innovation.

Wipfli can help. Our industry knowledge and technology solutions can help insurance companies capture and digitize veteran knowledge, implement AI-powered underwriting tools and create frictionless customer experiences while maintaining sound risk management practices. Learn more about our insurance services and contact us today.