Despite years of industry rhetoric around ecosystem plays and organizational agility, most insurance clients still perceive service providers as playing it safe, with a strong bias toward functional digital transformation. Insights from the HFS Horizons Insurance Services 2025 study suggest that while foundational outcomes such as cost reduction and process efficiency remain table stakes, the industry must start charting a more strategic path toward ecosystem alignment and cross-functional orchestration.
Here are three key insights that surfaced during our client discussions while analyzing the data presented in Exhibit 1:
- Functional transformation remains the dominant delivery mindset: A commanding 66% of client responses today highlight functional transformation as the core delivery capability of their providers. Even two years from now, 59% still expect this to be the norm. This shows that insurers continue to value tried-and-tested initiatives (claims digitization, policy modernization, process reengineering, and automation) for their ability to deliver measurable results. While these initiatives serve near-term goals such as cost efficiency and operational resilience, they often fail to shift the strategic trajectory of the business. The real risk here is stagnation. Insurers miss out on higher-order value creation when functional transformation becomes the ceiling instead of the foundation. Service providers need to look beyond workflows and start rewiring value chains.
- Ecosystem thinking remains an emerging and underutilized capability: Only 9% of respondents today recognize ecosystem development as a delivered capability, though there’s a modest rise to 15% in two years. This signals a credibility gap between what providers promise and what clients experience. Building an ecosystem isn’t about partner logos on a slide; it’s about enabling seamless data flow, joint product innovation, and mutual growth between insurers, brokers, tech partners, and InsurTechs. Clients want more than affiliations. They want action in the form of pre-integrated solutions, co-sell plays, outcome-linked models, and governance frameworks that minimize orchestration risk. Service providers must move past the ecosystem narrative and operationalize it as a delivery muscle.
- End-to-end organizational alignment remains aspirational: Only 26% of clients today, and 27% in two years, cite organizational alignment as a delivery priority. This includes capabilities that link the front, middle, and back offices (customer servicing, underwriting, data orchestration, and compliance) in a unified transformation roadmap. The stagnant trajectory indicates that alignment remains a PowerPoint aspiration for many providers rather than an executional strength. Insurers increasingly need providers who can connect the dots across journey design, operational agility, and experience measurement. Otherwise, transformation remains siloed, and value remains stuck.
Embracing delivery evolution to meet client expectations
To shift gears from tactical delivery to strategic orchestration, service providers must activate delivery capabilities across three dimensions:
- Ecosystem enablement: Move beyond point partnerships toward co-developed IP, reusable integration stacks, and shared monetization models.
- Experience-led design: Use GenAI and data orchestration to unify customer, agent, and underwriter journeys and deliver personalization at scale.
- Outcome-aligned metrics: Replace traditional SLA dashboards with value-focused scorecards that link transformation to growth, resilience, and stakeholder impact.
The Bottom Line: Insurance transformation can’t stop at fixing workflows.
Insurance clients are still rewarding functional transformation, but the ceiling is getting lower. Enterprise leaders must raise the bar for their service partners by demanding orchestrated ecosystems, experience-led journeys, and outcome-aligned metrics. Don’t reward providers for operational hygiene; reward them for moving the business forward.
