As interconnectivity grows, so does exposure to global risks.
In early 2025, global insured losses from natural catastrophes reached $100 billion.
At the same time, inflation, legacy systems, and workforce gaps fuel a volatile market, making resiliency in insurance essential to preserving policyholder trust and revenue.
What's Driving Volatility in the Insurance Market
Amid rising unpredictability, insurance companies must anticipate changes and respond with agility. To stay ahead, insurers are enhancing disaster management, automating claims intake, updating old technology, partnering with outsourcing providers, and using AI tools for security and compliance.
Natural Disasters Increase Reinsurance Costs
Policyholders rely on insurance to protect themselves from potential risks. When they purchase a policy, they pay to transfer the financial burden of costly repairs to insurers. Since catastrophic disasters rarely occur, insurance providers can generate increased revenue.
Yet natural disaster insurance is still expensive, pushing insurers to seek reinsurance for protection. Prices may have stabilized, but rates nearing record highs keep reinsurers cautious. If these issues continue, solvency could be tested. This strain is already evident in recent years as major P&C providers in California and Florida have paused new policies to avoid large claims.
To mitigate these losses, insurers use catastrophe exposure management. By merging property valuations with hazard maps, they understand risks better. These insights also help enhance underwriting, retention, and reinsurance models, providing a crucial advantage in a volatile market where a single event can threaten survival.
Inflation Heightens Rate Adequacy Pressures
Inflation has driven up claims costs in auto repair and construction. In 2024, personal auto insurance rose by 2.7% monthly while lumber and steel surged by 73%. These increases forced insurers to raise premiums. According to a WTW survey, many leaders now worry about increased limit factors and expect rate adequacy to become increasingly difficult to sustain.
To counter these pressures, many are turning to technology to enhance efficiency and offset rising costs. AI tools help speed up claims processing, optimize care networks, and secure better pricing. These efficiencies protect margins and premium stability, allowing insurers to maintain rate adequacy and profitability despite ongoing price hikes.
Legacy Workflows Derail Growth
Over 74% of P&C insurers still use outdated legacy core systems, which impedes their ability to launch new products, automate claims processes, and implement real-time improvements in member support.
Meanwhile, about 1 in 5 policyholders say they would switch insurance companies if digital services fall below expectations, highlighting the need to modernize.
To protect customer satisfaction, insurers are breaking down silos to gain a 360-degree customer view, enabling faster product launches and personalized services. With AI tools and intuitive digital interfaces, insurers can simplify claims, offer real-time support, and provide a seamless experience that improves customer experience and reduces attrition.
By replacing legacy systems with digital workflows, insurance providers benefit by:
- Boosting Cost-Efficiency & Accuracy: Automation of underwriting, claims processing, and policy administration cuts errors, saves time, and lowers expenses.
- Using Data-Driven Insights for Smarter Decision-Making: AI-driven analytics enable more precise portfolio management, proactive fraud detection, and smarter pricing strategies.
- Improving Customer Satisfaction & Retention: Faster service, personalized communication, and seamless digital experiences increase loyalty and reduce churn.
Ultimately, digital transformation plays a pivotal role in building resiliency in insurance. Beyond delivering personalized, digital-first experiences to policyholders, it also helps insurance companies stay ahead in innovation and streamline processes across underwriting, claims processing, risk assessment, and overall customer experience.
Talent Shortages Threaten Operations & Trust
The insurance industry is expected to lose nearly 400,000 workers by 2026, creating an expertise gap that extends beyond staffing shortages. With tenured adjusters and underwriters retiring soon, insurance providers need to ensure business continuity and retain policyholder confidence.
To counter these challenges, many are turning to AI innovation and effective collaboration. These allow insurers to proactively address workforce gaps and strengthen talent acquisition and retention. Key strategies include:
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Scaling Recruitment & Onboarding: Working with partners that have proven success and extensive talent networks can accelerate hiring, streamline onboarding, and reduce attrition.
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Utilizing Cost-Efficient Outsourcing Solutions: Leveraging onshore, nearshore, and offshore teams for technical support allows insurers to maintain service quality while controlling costs.
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Enhancing Professional Development: Investing in ongoing training and career growth opportunities boosts employee engagement, keeps staff up to date on the latest tools and technology, and strengthens overall workforce capability.
With these measures, providers can minimize disruptions, respond quickly to industry changes, and strengthen resiliency in insurance.
Stricter Compliance Demands Stronger Security
Last year saw over 2,650 changes to state insurance regulations, with activity expected to rebound in 2025. To maintain compliance, teams must navigate these complexities. However, this is likely to become more difficult due to omnibus bills and confusing rules that complicate tracking and implementation.
For this reason, cybersecurity remains a key regulatory focus and a top concern for industry leaders. Rising threats like social engineering and ransomware have only intensified this focus. In particular, New York has led the way by issuing comprehensive guidance; other states are expected to follow, driving increased regulatory scrutiny nationwide.
Considering the vast amount of data insurers manage, creating a strong cybersecurity culture at every level is crucial. Insurance providers can embed security protocols, offer regular training, and promote security-centric values. By treating cybersecurity as a continuous, shared effort, insurers can better safeguard sensitive data and uphold operational integrity.
How to Protect Customer Trust & Secure Revenue During Crises
In today’s volatile market, insurance providers cannot afford to rely on reactive strategies. Instead, they need to implement robust, proactive risk management frameworks to handle disruptions, respond quickly to unforeseen events, and protect both policyholder trust and operations.
Scale Staffing to Handle Claim Surges
During periods of high volatility, insurers face unpredictable spikes in claims and call volumes. With flexible staffing, they can ramp quickly, reduce backlogs, and maintain service quality amid market changes or talent shortages.
Additionally, deploying experts in risk management, compliance, and digital tools with a customer-centric approach also reinforces policyholder trust, while AI-powered talent acquisition and training accelerate agent readiness while reducing costs during economic inflation.
Leverage AI to Automate Tasks
AI is transforming how insurers manage underwriting and claims, delivering faster, more accurate, and scalable operations. Some tasks it can automate include:
- Claims Intake: AI-powered tools can automatically gather claim details from policyholders through digital channels, minimizing manual intake efforts. Additionally, self-service chatbots give policyholders access to data and support 24/7, providing them with greater control over information.
- Fraud Detection: AI can identify potential fraud and detect errors before they occur, enhancing security and compliance for both insurance providers and policyholders.
- Trend Analysis: AI models can predict claim severity, allowing insurance providers to allocate resources and prioritize high-impact cases efficiently.
Both insurance providers and policyholders operate in an uncertain landscape where even minor delays or disruptions can sink trust. Consequently, AI-powered technology enables insurers to remain agile, identifying errors before they escalate and leveraging data-driven insights for smarter, quicker decision-making.
Modernize Workflows for Agility
Delivering a superior customer experience remains a key pillar of building resiliency in insurance. High-quality support fosters customer loyalty, reduces churn, and attracts new policyholders.
Equally important are agile workflows that allow insurers to respond swiftly to spikes in claims, regulatory changes, and shifting market conditions, ensuring consistent service levels under pressure.
Omnichannel CX ensures seamless engagement across voice, email, chat, and social media. As customers increasingly expect personalized, digital experiences, pairing unified channels with skilled champions who deliver care, empathy, and expertise is crucial for insurers to stay agile and strengthen customer relationships.
Lower Costs with Global Delivery Network
Providing the right support in crucial areas is vital for keeping policyholder trust and a competitive edge. Partnering with global CX companies provides access to highly skilled teams with knowledge in underwriting, claims, compliance, and customer service, while also using advanced technology platforms.
These partnerships also deliver measurable efficiencies. On average, insurance companies can cut costs by up to 60% when they work with global talent. By relying less on internal resources, insurers can protect their margins, improve their stability, and maintain high-quality service.
Building Resilience From Within the Organization
For lasting resiliency in insurance, providers must lay the groundwork within their internal processes, creating a ripple effect across operations and customer experience. Below are key strategies to do that:
- Promote Learning: Reflecting on past crises and operational bottlenecks can enhance organizational knowledge. This allows teams to learn from mistakes and effectively adapt to future challenges.
- Foster Cross-Team Collaboration: Aligning underwriting, claims, operations, and technology departments enables faster responses to emerging risks. When teams collaborate, they improve their problem-solving skills and streamline processes throughout the organization.
- Reinforce Resilience as a Core Value: By integrating insurance risk mitigation, adaptability, and customer-centricity into performance metrics, insurers can empower employees to build resilience into their daily operations and decision-making.
Implementing these measures enhances organizational resilience and allows insurers to navigate a volatile market confidently. Beyond promoting team cohesion, it cultivates trust among employees, fostering a more open, accountable, and collaborative communication.
What Will Test Insurance Providers Most in 2026
To withstand a volatile market, insurance providers need to strengthen operations and service delivery. By 2026, tariffs will slow down global and national markets. Insurers may see slower premium growth, increased claims severity, and higher repair costs. To stay profitable while meeting customer satisfaction, they'll need to improve efficiency and adaptability.
For many, raising premiums or limiting coverage may provide short-term relief. However, these actions can frustrate policyholders and harm long-term loyalty. A better approach is to strengthen customer experience with 24/7 support, reducing friction and building trust by offering the right kind of support during critical moments.
Lastly, customer experience and digital transformation work together to drive operational efficiency. With AI-driven technology, insurers can streamline processes, ensure data accuracy, and improve communication. In the long term, agility is what prepares insurance companies to thrive and last in a turbulent landscape.
At Everise, we partner with insurers to turn agility into lasting advantage. Our state-of-the-art AI tools, agile CX solutions, and deep insurance expertise modernize workflows, enhance scalability, and protect policyholder trust.
