Tech Trends in Insurance 2025: AI, Telematics, and Your Future Policy

Artificial Intelligence (AI) is the hottest tech topic of 2025. In its simplest form, we can think of AI as a lightning-fast search engine. AI views and collects data to churn out predictions quickly. AI in insurance may help everyone, from the major corporations to the individual consumer financing their first used car.

Still, AI in insurance is not always a perfect solution. It can only predict correct answers if there are very few unknown variables, and if the data it scans is complete and correct. (This suggests a future of blockchain computing in the American insurance tech stack, but that’s a blog for another day.)

Today, we licensed insurance agents at Einsurance.com are here to explain how we believe AI will be used in insurance, how it will affect both individuals and businesses, and the most immediate areas we believe will need improvement.

Digital Insurance Trends: AI in Insurance

There are three ways we can consider AI in insurance:

The corporate angle, how AI in insurance will affect big business
The consumer angle, how AI in insurance will affect individual customers
The views of professionals, how AI in insurance will affect people employed in the industry

Let’s begin with a look at AI and telematics on the corporate side.

Insuretech 2025: AI in Insurance from the Corporate Perspective

Corporations, like banks, investment firms and insurance companies, will appreciate faster underwriting and (potentially) more reliable risk management.

For those unfamiliar with the terms:

Underwriting is the act of reviewing a policy for potential risks and calculating the premiums a customer should pay for their insurance.
Risk management is the act of forecasting financial risks and minimizing their likelihood or severity.

In the realms of property and casualty insurance, for example, AI might help an insurance company predict how likely a home is to endure a major wildfire, flood or earthquake.

AI will also help predict and how likely a 22-year-old male driver is to wreck his new Mustang and help to generate proper insurance premiums for a high risk driver. This is something human underwriters already work on, quite successfully. AI should make these predictions even better.

Auto Insurance Trends in 2025: Usage-Based Insurance

Auto insurance will continue to evolve towards usage-based insurance policies, partially thanks to AI.

Usage-based auto policies and premiums are based on how many miles a vehicle is driven in a year, and for what purpose. With this pricing model, consumers who only drive 2,000 miles annually pay much less for their insurance than someone who drives 30,000 miles.

From a risk management perspective, this makes sense. A car that only travels a few thousand miles faces fewer risks than one travelling 30,000 miles.

And insuretech in 2025 supports these advancements. Today, insurers use many tools to watch mileage on a vehicle. If you currently have an insured auto, you’ve likely filled out forms about your mileage. But that’s only the beginning!

You may not know it, but insurers are collecting data about your driving habits using:

DMV titles and sale information
Third-party sources, like Carfax
Law enforcement accident reports and traffic tickets
Cameras at toll booths and intersections
Reports from organizations, like colleges that provide parking passes
And even satellites that can read a license plate from space

The bigger, more prestigious and more prolific your insurer, they more they spend on these tools. Next, they train AI to review this data, and it will produce predictions about your current and future mileage, plus the likelihood your driving habits will take you into accident-prone areas.

But that’s not the only area we’ll see more changes in 2025 thanks to AI in insurance. Another space that will see significant change is life insurance.

AI Possibilities in Life Insurance Underwriting

In the life insurance realm, we expect AI to predict human deaths and categorize them based on details like a person’s age, location, sex, tobacco history, work history, family history, and possibly genetics.

Historically, this is something human underwriters would do using the Law of Large Numbers. Underwriters did not predict specifically who might die, in a group of like individuals. Rather, insurers can estimate how many in a group of like individuals will pass away.

Put a different way, before AI, underwriters could not say precisely that John Smith, age 55, who uses tobacco, lives in Virginia and works as a car salesperson will pass away this year.

But they could predict that out of 100,000 smokers age 55 in Virginia, exactly 11,934 would pass away. (These numbers are entirely creative; they are not actual statistics.)

Ultimately, AI could save insurers, financial institutions and investors significant money. AI can make these predictions in fractions of a second. Still, we can envision some ethical hiccups, especially when it comes to individual health predictions and genetic information.

AI, Life & Health Insurance and Genetic Information

Until now, underwriting estimates were always extremely educated guesses. But as AI in insurance grows and “learns,” and genetic information becomes available (in some states, so far) this insuretech may be able to predict the actual date of death of an individual.

These predictions may be made based on your:

Age
Sex
Lifestyle
Location
Health history
Family health history
And genetic data as it becomes available

Do you see the ethical quandary? Do people really wish to know when they may pass away? And if they do, is this information they wish an insurer to know? The questions pile up faster than answers.

And, of course, there is always the possibility of a blip in the system. Consider, for example, COVID-19 fatalities and errors in reported death statistics.

Hiccups in the System & Errors in the Data

According to the US National Library of Medicine, more than 268,000 deaths were not property attributed to COVID-19, from 2020 through 2022.

Conversely, we know that hospitals were paid extra funds for COVID patients, which leads many people to believe COVID deaths were over-reported.

Our point is that AI can only regurgitate the statistics it is given to make predictions. If these numbers are inaccurate, AI predictions are false. That’s a major concern for life and health insurers looking to AI for underwriting, and it should be a concern for consumers who will pay premiums based on AI insuretech.

This leads nicely into our next section, AI and the consumer experience.

How Consumers Will Experience AI in Insurance & Telematics

The term “telematics” describes how information is passed long distances. Insurance documents that once relied on snail mail, could then be faxed, can now be scanned and emailed. Most consumers are fairly internet savvy at this point and have access to a scanner.

While online, consumers can expect more AI and digital interfaces throughout their insurance experience in 2025.

Chatbots Will Dominate the Customer Experience

Rather than wait on hold on the phone to call in a claim, they’ll chat online. And rather than visiting a local insurance agent for a quote for new policies, insurance customers will probably use their phones and laptops to request quotes, pay premiums, and obtain customer service.

Some customers, “millennials” and “Gen Z” in particular, will probably appreciate the speed and lack of a drawn-out human interaction, available 24/7/365, for their insurance needs.

Others will reminisce about the days when they could sit with a flesh-and-blood insurance agent, enjoy some small talk and a cup of coffee, while thinking through their insurance policies and comparing coverages.

Besides this missing human touch, which some people may prefer, for folks who don’t have a fast connection, AI creates a huge hassle.

AI in Insurance Creates Challenges for Consumers Without Internet Access

Consumers who don’t have internet access at home, or those who live in areas with poor connectivity, will struggle to get the insurance they need, and they may struggle to get prompt customer service.

For instance, according to PBS, 28% of people living on tribal lands cannot access high speed internet. As the number of licensed insurance agents dwindles (because AI is replacing them, more on that shortly), these consumers will travel farther to meet with agents or spend longer times waiting on hold for a human interaction.

And we expect the claims process may become entirely digital, in time.

AI in Insurance Claims

Right now, in 2025, if you were to experience a fire in your kitchen or a fender-bender on the street, you will probably call a toll-free phone number found on your insurance policy or on your insurance cards.

Then, you’ll give all the pertinent information to a human, who will ask all about the damages to your home or auto. From there, you are assigned a human claims specialist, who uses tools to calculate the value of your damages. (AI is changing these tools, too.)

Ultimately, you get a check from the insurance company that covers most of the damages you’ve endured.

AI will change this process in insurance in the future. Eventually, consumers will go through this entire process online. A claim will be sent to the insurer online, AI will review photo evidence and reports made by law enforcement or first responders, and it will compare damages to known claims paid for similar damages.

Looking at similar claims, AI will decide whether to “total” a car, or how much should be paid for a contractor to come rebuild fire damaged kitchen.

In some ways, consumers may find this appealing. They’ll spend less time on the phone, and less time waiting for a human claims representative to show up. They may not need to chase quotes from contractors and auto shops.

However, this does give insurers the ability to decide what a claim is worth, and errors will be challenging. It will be difficult to fight this system, if an AI bot says your kitchen rebuild should cost $15,000, and all the local contractors say it should cost $20,000, consumers may find themselves in a bidding war for the lowest priced repairs.

Finally, let’s quickly explore how AI is affecting employees in the industry. As licensed insurance agents, we are experiencing these trends in real time.

How Insurance Industry Professionals Experience AI

AI is slowly but surely replacing many jobs in the insurance industry. It makes sense on paper, the reduction of human workforce will save them millions, if not billions of dollars every year.

AI will ultimately replace:

Most local insurance agents
Most underwriting professionals
Most field claims specialists
Many call center staffers

Beyond payroll, insurers will save on things like commercial real estate and group health insurance policies for employees.

We industry professionals see the writing on the wall. Many insurance agents are retiring completely or switching to a work-from-home situation that allows them more freedom with their reduced responsibilities.

And while many consumers will miss the classic insurance interaction at an office, more will appreciate a streamlined, tech-savvy approach.

In the End, Who Benefits Most from AI in Insurance?

Insurance, while often complicated, exists to help people sleep better at night. A well-insured homeowner knows their financial future is stable in the case of a fire, for instance. A well-insured driver knows they will be protected should they experience a wreck. Spouses and families stress a little less when they feel secure in their future with life insurance.

Still, financial institutions benefit most from insurance. According to the Federal Reserve Bank of New York (“the Fed”), Americans owed $12.6 trillion dollars in mortgage debt at the end of 2024, and $1.66 trillion on auto loans.

Those loans generate tremendous amounts of interest, but banks will only loan money when assets are insured. This makes sense, they need to know their risk is protected before loaning those funds.

Ultimately, it is the major organizations which will gain the most from the AI movement. Individuals in the industry may find themselves looking for a new career. Hopefully, consumers will experience some of the savings the AI revolution brings to the world of personal lines insurance.