Informed to reform: how can insurance tackle its biggest challenges?

If BIBA’s annual conference was anything to go by, the insurance sector should expect new beginnings and new technologies in the months ahead. This year’s theme, ‘A New Era’, was a nod to this with BIBA’s chief executive, Graeme Trudgill, picking out developments in AI, politics and regulation as catalysts for change in his opening speech⁽¹⁾.

Trudgill defined the direction of travel as one ‘rich with opportunities, innovation and challenges’, and while true, the size of insurance’s challenges could overshadow progress if left unattended. Which begs the question – what are the sector’s biggest obstacles in 2025 and beyond, and why is adopting a more informed approach the solution?

Following his attendance at BIBA 2025, BCIS’s Strategic Insurance Accounts Manager, Anthony Struwig, discusses.

Informed to reform: how can insurance tackle its biggest challenges?

Insurance is on the cusp of transformation. This year’s BIBA Conference was testament to this with a big focus on the impact of AI, adapting to fraud and other new risks, and increasing the visibility of brokers among SMEs. Regulatory change was another spotlight topic. The stripped back version of the Financial Conduct Authority’s (FCA) insurance rulebook is currently under consultation, and with the regulator’s five-year strategy mapped out, conversations centred on the impact for brokers, insurers and customers alike.

Insurance is in a good place, but it’s clear the sector faces several challenges ahead. Regulatory change is the latest, and underinsurance and legacy thinking remain stubborn thorns in the sector’s side. The mindset of ‘why fix something that’s not broken’ continues to hold back progress as technological and climate developments destabilise the UK’s risk landscape.

Now is the time for a more informed approach. By better understanding business performance, up-to-date reinstatement data, and how best to adapt to regulatory changes at an individual level, insurance firms can improve service efficiency and deliver even greater value to customers.

The big three

There are three main challenges insurance faces with incoming regulatory change the most short-term.

The FCA’s revised rulebook is a largely positive move for insurance. Removing ‘outdated or duplicated requirements’⁽²⁾ will give insurance firms more freedom to tailor certain service procedures and employee development to suit their needs and goals. However, with the consultation period on the proposed changes ending at the start of July, firms do not have much time to consider how they might adapt to the new rulebook.

Immediate challenges include whether to continue providing the heightened level of protection to large commercial insurance clients, as dictated by the Consumer Duty. Under the changes, clients who fall under this definition will no longer be captured by the FCA’s conduct rules, meaning it’s down to firms to assess the strategic benefits of leaving big clients to manage risks independently. As underlined by several sector specialists at Deloitte, insurers could offer protection for large policyholders above and beyond the expectation to gain a market edge⁽³⁾. However, this should be considered against how feasible or beneficial dropping Consumer Duty obligations for certain clients would be.

If regulatory upheaval is the sector’s most imminent challenge, underinsurance is its greatest and longest-standing. Across the books of business reviewed on BCIS’s Intelligent Rebuild Cost Platform, the average underinsurance among listed properties is estimated to be in the region of 40%.

In the context of the built environment, the insurance market is simply not equipped to handle underinsurance at mass. The primary risk for underinsurance is having an outdated or inaccurate estimate in the first place. Getting this right comes down to tracking the rebuild figure in line with current market conditions and ensuring it accounts for economic or regulatory factors. With up-to-date rebuild costs, insurers will be able to better prepare for the future. These should be factored into plans alongside changes to building and fire safety regulations and the more stringent risk assessments these require.

Keeping in step with technological progress is the sector’s third biggest challenge. Aviva’s latest Broker Barometer showed 85% of brokers are interested or very interested in enhancing their operations with digital or automated processes⁽⁴⁾. While the sector is still heavily reliant on outdated CRMs, spreadsheets and other legacy tools, the BIBA Conference illustrated there is a growing appetite for using current software, AI and automation.

The benefits of doing so almost go without saying – improving the quality and speed of risk assessments, greater adaptability to regulatory demands, and the ability to better tailor insurance products to customer needs. However, embracing digitalisation must go hand in hand with maintaining strong relationships. For brokers particularly, AI is little use when making clients feel confident and supported in their investment decisions. As highlighted at the BIBA Conference panel, ‘The Value of an Insurance Broker’, clients still value human interaction so it’s about using technology to elevate relationships, not replace them⁽⁵⁾.

From informed to reformed

Insurance’s challenges are clear, but how can a more informed approach help? Akin to any other sector, it comes down to having the right insights to make the best decisions.

As mentioned, when tackling underinsurance, this means assessing all of the available information and factors influencing a reinstatement cost, and ensuring the figure used to set premiums reflects the wider context.

To overhaul legacy systems, an informed approach could be analysing current business performance, from productivity levels to customer feedback, and identifying where digital investment will bring the most value. While there can be upfront work with using a new digital tool, it’s usually worth the increased efficiency afforded later down the line. Using a tool that can produce tailored reinstatement assessments, for example, is an efficient way for insurers to identify risk exposure in portfolios and gives brokers the insight to offer a more informed, personalised service to clients.

Equally, an informed approach can be taken to improve business adaptability to regulatory change. Proactively considering the FCA’s proposed changes will help insurance businesses to assess what process changes will best suit their clients and operating models. For instance, how frequent should product value reviews be for each client to minimise harm? How many hours of employee training are actually needed, and is this an opportunity to update training plans?

As insurance enters its new era, utilising insights – from client feedback and realistic cost data to operational performance metrics – is essential for overcoming these challenges.

Overlooking proactivity could put new digital and customer service heights well out of reach.

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^{(1) BIBA – Graeme Trudgill BIBA Conference Speech 2025 – here}

^{(2) FCA – FCA strips back insurance rulebook – here}

^{(3) Perspective – Simplifying the Insurance Rules – Breakdown of initiatives proposed in the Consultation – here}

^{(4) AVIVA – Broker Barometer: a growing appetite for digital automation and generative AI – here}

^{(5) Insurance Times – Biba 2025: Brokers must prove their human value in AI-driven future – here}