2025 is not over yet, but it is, Natural Disaster and Climate Report from Gallagher Re shows that in the first half of the year alone, global insured losses have already reached $84 billion. At this rate, 2025 is expected to be the fifth consecutive year with insured losses exceeding $100 billion. All of this illustrates the fact that the frequency and intensity of climate-related events – floods, wildfires, earthquakes – have increased dramatically, reaching almost unsustainable levels. Insurers are adapting to this fundamental shift in underlying risk and claims patterns and how it impacts the products and services they bring to market.
In the APAC region and New South Wales, Australia, where I live, the natural disasters we overstate tend to be floods and bushfires. According to the Australian Bureau of Meteorology Total precipitation ranged from about 330% to 630% of average in Greater Sydney in August 2025 (last month of winter for the Southern Hemisphere), making it an extremely wet month and many areas recording the highest August totals on record. Historically, wet winters followed by drier springs significantly increase the risk of summer bushfires. We have already experienced heat waves in the first two weeks of spring (September 2025). That’s why we’re preparing for what’s to come. In this context, people expect decisive action from their government and their insurers, demanding both the reassurance of a compassionate claims service and practical guidance on preventive and mitigating measures.
Poor claims service is a brand risk
Not only meeting but exceeding these customer demands has become a strategic imperative. In the age of social media and instant gratification, empathy, transparency and speed are king. Poor claims service, particularly when it comes to emotional NatCat claims, is not just a lack of customer experience – it’s a brand risk.
Claims are the emotional moment of truth for a customer when the insurance company follows through on its promise to ease the pain when it is truly needed. If the plaintiff feels let down, real damage to the insurance company’s reputation and thus the brand value is at stake. Therefore, despite the advances in AI and digital transformation, it is disappointing to see this key Customer experience metrics– Customer loyalty/retention, effort rating, satisfaction and lifetime value – have remained largely stable or have only improved slightly over the last three years.
The insurance sector is outperforming the industry average in some areas: 47% of executives say customer satisfaction has improved somewhat over the last three years, compared to 41% across all industries. However, the insurance industry is lacking in driving loyalty (with a difference of 8% compared to all industries) and improving NPS (-5%). This suggests that while insurers are excelling at delivering positive initial experiences, there is also a critical opportunity to improve long-term engagement and optimize interactions to achieve sustained success.
Insurers need to move from a payout mentality to a protection mentality.
Accentures Transform claims and underwriting with AI According to the report, up to $170 billion in premiums are at risk between 2022 and 2027 due to poor claims performance. Among plaintiffs dissatisfied with their experience (31%), the speed of settlement (60%) and complexity of the closing process (45%) were the top concerns. This dissatisfaction directly drives churn: 30% of dissatisfied applicants switched insurers, and another 47% considered doing so.
There is an opportunity to turn today’s challenges into moments of customer delight. Historically, insurers have been reactive, responding to claims after damage has occurred. But this model is changing quickly. Today, digital-first carriers are leveraging predictive and IoT-driven models that proactively prevent or resolve claims more quickly, reduce costs and improve customer outcomes. Our Insightful insurance innovation The report, based on data from our long-standing sponsorship of the Qorus Innovation in Insurance Awards, found a tripling of product innovation program launches from 2019 to 2023. The future of claims isn’t just faster – it’s smarter, more predictive and more preventative. The lead sponsors will be:
- Adopt a proactive claims model– using IoT, GenAI, Agentic AI and data analytics. State Farm has deployed the IoT solution Tinga smart home plug-in that detects electrical fire hazards, reduces damage costs and improves customer protection.
- Redesign the customer experience– to build trust and loyalty, not just manage transactions. On the commercial side, insurers like AXA XL And Munich Re has entered into a partnership with WINT’s AI-powered IoT water management solution for construction sites and buildings, aiming to prevent damage from water leaks and reduce claims.
- Invest in disaster resilience– Use of automation and predictive modeling. Traditional models and manual workflows struggle to keep up with the size and urgency of today’s risk landscape. As a result, insurers are rethinking the way they assess, price and manage catastrophe risks. Future-proof insurers view resilience not just as a pricing issue, but as an opportunity for product innovation. Intact Financial Corporation has launched a pilot partnership with Wildfire Defense Systems (WDS) to provide on-site prevention services (brush clearance, use of sprinklers) as wildfires approach to reduce wildfire damage before an incident occurs.
- Embrace customer-centric, digital models– tailored for speed and simplicity. For example P&C freight forwarder Suncorp Australia received the Australian Financial Review (AFR) AI Award in the Ethics and Responsibility category for its application Single view of the claims tool. The tool uses generative AI to quickly display the status of a claim and prompts Suncorp employees to take steps to process the claim. Processing 2.74 billion words has produced 1.8 million claim summaries.
80% of research participants In our joint Accenture-Qorus report, we shared that their innovation projects either met or exceeded expected financial results. For non-financial goals such as customer engagement and satisfaction, brand strength and employee loyalty, the score rose to 98%. In this context and iIn a world of rising risks and expectations, insurance is no longer just about managing loss – it’s about building trust. Insurers must take action to incentify They integrate innovative, preventative measures into their insurance policies and redesign the customer experience in the event of a claim to truly meet customer needs. I would be happy to discuss this huge opportunity with you – feel free to contact me at Linked.
Special thanks goes to Sachin Mathur And Men of Sood from Accenture Research for their contributions to this blog.
