The U.S. P&C insurance industry is in the midst of profound transformation in 2025, driven largely by rapid technological advancement and evolving risk dynamics.
According to Kelly King, a seasoned expert with over 30 years of experience in the field and a key leader at WaterStreet Company, this year marks a pivotal moment where innovation is no longer optional.
WaterStreet Company offers P&C Policy Administration Software to achieve greater efficiency, scalability, and customer satisfaction.
1) AI Integration Moves from Planning to Execution
The most influential trend shaping the P&C sector in 2025 is the widespread implementation of artificial intelligence across all operational areas.
For years, many carriers treated AI as a future investment, something to keep on the strategic roadmap. But today, the industry has entered a new phase where execution is expected. According to the 2025 Conning Survey on AI & Insurance Technology, 90% of C-suite respondents are in some stage of generative AI evaluation while 55% are in early or full adoption.
This shift reflects a broader recognition that AI is key to achieving the next leap in productivity, enabling insurers to enhance underwriting precision, streamline workflows, and offer faster, more responsive service to policyholders.
“In nearly every phase of operations, we see initiatives to introduce AI this year. From process workflows and customer service to software development process and predictive modeling.” – Kelly King, CFO WaterStreet Company
2) Shifting Competitive Landscape Driven by Technology
Technology is also redefining competition within the P&C market. While personal auto lines have seen limited disruption, personal property lines are experiencing a surge of new entrants, including both carriers and MGAs.
This influx is largely a response to capacity constraints from large insurers, many of whom are retreating from high-risk locations due to rising exposure to catastrophic perils, increasing replacement costs, and social inflation. The resulting coverage gaps have created opportunities for nimble, tech-enabled companies to step in, often with a focus on either rapid growth or specialized market niches.
According to AM Best, the number of MGAs writing $500 million or more in direct premiums increased from 12 in 2023 to 19 in 2024, with six of those surpassing $1 billion DPW. Much of this growth is attributed to MGAs specializing in niche markets and leveraging insurer capacity for specialty risk management
New market players are leveraging flexible policy platforms, real-time analytics, and modern distribution strategies to scale quickly. Commercial lines are following a similar path, with technology playing a critical role in reducing operational friction and tailoring coverage to emerging risks. Startups and new MGAs are building from the ground up with transparency, efficiency, and digital-first engagement models that better match the expectations of modern commercial clients.
“Technology, analytics, and modern flexible policy platforms all enable the new entrants to gain scale quickly in markets that need them. New entrants, starting with a clean slate, are seeking ways to better meet prospects where they live and transact their insurance needs in a more transparent way.” – Kelly King, CFO WaterStreet Company
3) Policyholders Embrace Technology and Expect More
As insurers modernize, policyholder behavior is evolving in parallel. Many of today’s innovations focus on enhancing personal property coverage through smart technologies. Devices like water sensors and other connected home features are not only helping carriers manage risk, they give customers clearer incentives through premium discounts and easier policy access. Water-related damage and freezing accounts for nearly 29.4% of all homeowners insurance claims, making smart sensors particularly impactful to detect and prevent costly damage.
As policyholders pay closer attention to claims causes and costs, expectations around claims services are rising. Particularly in regions affected by hurricanes and other large-scale disasters, policyholders are demanding greater transparency and faster resolution. Carriers that can offer more seamless communication and real-time updates during the claims process are better positioned to retain customer trust during difficult moments.
This shift underscores the increasing importance of the customer experience in shaping competitive advantage. Policyholders want more control, more clarity, and more speed, especially when navigating coverage in high-risk or catastrophe-prone areas.
“Policyholders can increasingly obtain discounts and an easier path to obtaining insurance by embracing technology. An improved claims experience, especially for those experiencing catastrophic losses, are seeking better transparency into the claims settlement process and a speedier adjusting process.” – Kelly King, CFO WaterStreet Company
2025 P&C Insurance & Beyond
Kelly King, who has been with WaterStreet Company since 2015 and now helps guide carriers toward scalable policy administration solutions, sees 2025 as a watershed year for the P&C industry.
With three decades of insurance experience and a deep focus on operational efficiency, he emphasizes that insurers must move from planning to doing.
Carriers that thrive this year will be those that combine intelligent automation, modern policy platforms, and a customer-centric mindset. As risks become more complex and consumer expectations continue to rise, the ability to act quickly and flexibly will define long-term success.
Experience firsthand how WaterStreet’s cloud-based solutions can revolutionize your P&C insurance operations. Contact us today to request a consultation and demo.
