Insurance carriers must balance profit and progress with purpose to grow in 2025

The insurance industry is at a crossroads. Disruption is everywhere—from the increasing frequency of climate events and rising costs to shifting customer expectations and a growing demand for equitable coverage. These challenges are pushing insurers to rethink their strategies and redefine their role in society. While financial resilience and operational efficiency remain critical, the industry’s success now also depends on its ability to deliver inclusive, accessible solutions and exceptional customer experiences.

HFS Research has developed a new framework to guide insurers through this transformation. It focuses on three core pillars: protecting financial outcomes, driving operational agility, and elevating stakeholder experiences. Together, these pillars offer a roadmap for navigating uncertainty, embracing innovation, and thriving in a dynamic market.

Exhibit 1: The HFS Insurance Framework: Balancing purpose with profit

Source: HFS Research, 2025

1. Protecting customers’ financial outcomes

Insurance has always been about managing risk and ensuring financial stability—today. However, it must also be about equity in the form of fairness and access. This pillar highlights insurers’ dual responsibilities: safeguarding their financial health while protecting their customers’ livelihoods.

On the one hand, insurers must carefully manage profitability through critical metrics such as combined ratios, expense ratios, and premium growth—all impacting shareholder value. Better risk management is where much of the data and AI cannon is focused today, for good reason. Underwriters and product design teams need entirely new levels of access to emerging risk signals to improve risk quality and, ultimately, profitability. On the other hand, balancing the need for shareholder value and return on equity, insurers must address the widening protection gap, ensuring that underserved communities have access to affordable coverage. With increasing pressure from climate change, cyber risks, and economic volatility, the ability to adapt to new and unpredictable threats is essential.

Insurers can track metrics such as the combined ratio to measure underwriting profitability and coverage accessibility to evaluate how well they’re closing the protection gap for underserved markets. Suncorp’s CEO, Steve Johnston, recently published an article emphasizing the need for substantial investment in resilience infrastructure to prevent costly natural hazard claims. By advocating for proper disaster mitigation and insurance taxation reform to benefit communities, Suncorp aims to maintain insurance affordability and reliability even in the harshest of climates. Ultimately, this pillar is about balancing profitability with purpose. Financial outcomes can no longer be limited to shareholder returns—they must reflect a commitment to sustainability, inclusion, and long-term resilience.

2. Driving operational agility

Efficiency is no longer a “nice-to-have” in the insurance industry—it’s a requirement. This pillar focuses on modernizing operations to reduce costs, streamline processes, and scale quickly to meet evolving demands.

Legacy systems and outdated workflows have long weighed insurers down, creating inefficiencies and slowing response times. The industry is now making significant strides in transforming these operations—automating routine tasks, rethinking workflows, and integrating with ecosystem partners to create more agile, scalable organizations. Insurance behemoth AIG is an example of just how complicated global insurance organizations can become over time. In the last few years, the company has initiated programs that have delivered $1B in cost savings, divested businesses to simplify its portfolio, and transformed its operations. In his 2023 letter to shareholders, AIG CEO Peter Zaffino noted, “…our journey has entailed a substantial transformation of our operations, including investments in foundational capabilities to modernize our infrastructure, improve end-to-end processes, and capture and utilize data more effectively.”

Operational agility isn’t just about reducing expenses. It’s about unlocking the capacity to focus on what matters most—delivering faster, better services to customers, meeting regulatory requirements with precision, and positioning insurers to innovate and grow. By transforming the operational backbone, insurers can respond to challenges with speed and confidence while driving long-term success. Metrics such as total cost to serve, compliance cost, and customer acquisition cost can help insurers assess operational improvements and their progress in modernizing processes.

3. Elevating insurance stakeholder experiences

Insurance is built on trust. Whether it’s a policyholder filing a claim after a disaster or a broker advising a customer, every interaction matters. This pillar focuses on making those experiences seamless, personalized, and transparent, ensuring stakeholders feel valued at every step of the insurance journey. Vince Tizzio, president and CEO of AXIS, recently highlighted the company’s evolution by expanding offerings and establishing a strong presence in the specialty insurance space, noting the importance of customer trust in the industry. “Our customers have to have the trust and confidence that our company has the resilience and capability to meet them where they are when they notify us with a claim.”

Improving the experience means understanding the unique needs of customers, brokers, and partners and delivering solutions that meet them. This could mean faster claims settlements, intuitive self-service tools, or empathetic human support during critical moments. The goal is to create interactions that build loyalty, strengthen relationships, and reinforce trust. Customer-focused metrics such as Net Promoter Score (NPS) and claims settlement time clearly indicate how well insurers meet expectations and deliver seamless interactions.

Ultimately, customer experience isn’t just a differentiator—it’s a competitive necessity. Insurers prioritizing this pillar will retain their customers and set themselves apart in an increasingly commoditized market.

In 2025, we need to measure the insurance industry’s performance differently

The insurance industry is at a turning point. Customers are demanding more accessible and equitable solutions, regulators are calling for greater transparency, and risks are becoming increasingly complex and interconnected. This framework provides a lens for addressing these challenges and creating meaningful, measurable change.

By improving and protecting financial outcomes, insurers ensure their financial health while meeting their responsibility to provide affordable, sustainable coverage for all. By driving operational efficiency, insurers transform outdated systems and processes to become faster, more agile, and more cost-effective. And by improving the experience, they build trust and loyalty, turning every interaction into an opportunity to strengthen relationships.

At its core, this framework is about balance—finding the sweet spot where financial strength, operational excellence, and customer-centricity intersect. It’s about creating a future where insurers can thrive while delivering on their promise to protect people, businesses, and communities.

The Bottom Line: Insurers must align financial resilience, operational agility, and exceptional customer experiences to navigate a volatile landscape and deliver value for customers, stakeholders, and society at large.

The insurance industry has always been a cornerstone of stability in uncertain times. Now, it’s time to evolve that role, ensuring that insurers are prepared not just to adapt but to lead the way to a more inclusive, sustainable future where financial protection and security are accessible to all.