The property and casualty (P&C) insurance industry is undergoing a significant technological transformation. The Datos Insights report, Competitive Capabilities for Property and Casualty Insurers 2025, provides valuable insights into how P&C insurers are leveraging technology to gain competitive advantages across various functional areas. The report analyzes deployment and pilot data from P&C insurers, examining 83 technology-enabled capabilities spanning digital, data, and core capabilities across eight functional areas. Here are three key takeaways from this analysis.
AI Adoption Accelerating Across Multiple Functions
Artificial intelligence is no longer just an emerging technology in the insurance industry—it’s becoming a cornerstone of operational strategy. Insurers are actively piloting various AI applications throughout their operations, with a particular focus on generative AI (GenAI).
Machine learning/GenAI-assisted customer support is the most highly piloted capability among P&C insurers, with 42% of surveyed companies investing in this technology despite only 4% having deployed it so far. Other AI applications gaining traction include GenAI-generated documents, AI-enhanced chatbots for distribution and customer engagement, and AI-assisted underwriting. Approximately a quarter of insurers are piloting AI capabilities in underwriting, while GenAI coding and testing shows significant pilot activity despite having no mature deployments yet.
This acceleration in AI adoption reflects insurers’ recognition that these technologies can dramatically improve operational efficiency, enhance customer experiences, and provide competitive advantages in risk assessment and fraud detection.
Digital Capabilities Outpace Data Analytics in Maturity
The report highlights an interesting disparity in technological maturity: across functional areas, digital capabilities consistently show higher maturity levels than data and analytics capabilities. This pattern reveals the industry’s initial focus on digital transformation, particularly in customer-facing areas like account access, corporate websites, and digital workflows.
Digital workflows in underwriting and claims, full account access for distribution partners, and user-centric corporate websites are among the most widely deployed capabilities, with implementation rates of 88% or higher. These digital capabilities represent table stakes for today’s P&C insurers, focusing on improving communication, transaction processing, and operational efficiency.
However, the study also indicates that data and analytics capabilities are now receiving greater attention and investment, particularly in areas like predictive fraud scoring, customer value analytics, and AI-assisted claims processing. This shift suggests a maturing approach to technology, where insurers are moving beyond basic digital transformation to leverage their data assets for deeper insights and more sophisticated decision-making processes.
Customer Engagement Shows Most Growth Potential
One of the more interesting insights from the study is the current state and trajectory of customer engagement capabilities. Customer engagement shows the lowest maturity but the highest level of pilot activity among all functional areas, pointing to significant near-term advancement on the horizon.
Customer-centricity has become crucial, transforming how insurers conduct business with policyholders. There is substantial pilot activity across all technology categories in customer engagement, particularly in AI-assisted customer support and chatbots. This focus reflects insurers’ recognition that customer expectations are rapidly evolving, demanding more personalized products and streamlined services.
The sharp decrease in insurers’ digital customer engagement maturity compared to 2022 is particularly notable, indicating that the bar for excellence in this area is constantly rising. As insurers strive to keep up with changing customer expectations, we can expect this functional area to see the most dramatic transformation in the coming years.
Looking Forward
As the P&C insurance industry moves through 2025, the technological landscape continues to evolve at a rapid pace. Insurers must balance investments across digital, data, and core capabilities to maintain competitiveness. The difference between simply enabling a capability and truly leveraging it to maximum effectiveness will be a critical factor in separating industry leaders from the rest.
For insurance executives, the message is clear: continued investment in AI, data analytics, and customer engagement technologies is essential, but these investments must be accompanied by rethinking business processes and even reimagining the relationship between insurers and policyholders. Those who successfully navigate this technological transformation will be well-positioned to sell more products, manage risk better, and operate more efficiently in the years ahead.
