For P&C insurers across the U.S., 2025 was a true test of resilience and adaptability. The industry faced a surge in both the frequency and severity of catastrophic events, while inflation and foreign policy pressures drove up average claim costs and eroded margins. These external pressures were compounded by significant internal challenges, including legacy system limitations and employee retention issues.
All of which, as the American Customer Satisfaction Index (ACSI®) Insurance and Mortgage Lenders Study 2025 highlights, reduced the ability of many P&C brands to remain aligned with customer expectations. Sector average customer satisfaction scores for speed of claims processing, contact center satisfaction, and agent courtesy and helpfulness all fell by 5%.
In the auto insurance space alone, this combination of CX disconnect and price increases meant that, according to J.D. Power data, by mid-2025, 29% of customers had switched insurers. Additionally, in terms of overall customer satisfaction scores, 38% of all respondents gave their provider the lowest segment rating, placing them at a higher risk of churning at the end of their current policy.
A softening market means a hard CX focus
Still, even in the face of increased customer attrition and greater small print scrutiny, because carriers had room to maneuver, they were able to offset much of this churn and drive growth through a combination of premium price increases or reductions in the scope of coverage.
However, as the market begins to soften, passing on prices to the consumer is no longer possible. And while downward pressure on premium prices is already reducing attrition, it is also reducing insurers’ options when it comes to driving growth or expanding their customer bases.
As consumers become less likely to shop around or switch, carriers that have relied mainly on competitive pricing to increase market share will find it increasingly difficult to stand out or to maintain momentum.
In this new environment, customer experience quality and consistency across the entire journey will determine the winners and losers. And while this new reality presents genuine opportunities, it will also present significant challenges for insurers that have allowed a gap to grow between service delivery and customer expectations.
Within CX, technologies only truly deliver a return on investment if they help a brand make a change, unlock an efficiency or standardize or streamline a process that increases overall customer-centricity.
However, as markets soften and budgets come under greater scrutiny, the urge to invest mainly in technology — especially AI — to automate processes and lower the cost to serve is understandable. Yet, viewing artificial intelligence solely through the lens of savings is both too narrow and too short-sighted, particularly in an industry where emotional connection and trust are fundamental to success.
Instead, insurers must take a holistic, end-to-end approach to CX, understanding where AI can truly augment and elevate each stage, from sales and onboarding to servicing and claims.
Empowering agents with AI
As the percentage of consumers shopping around for deals falls, carriers have fewer customer acquisition opportunities. Maximizing the chances of success requires speed, but that speed needs to support an agent with the right blend of skills (and access to the right information) to convert as many prospects into customers as possible.
In these scenarios, AI provides the speed of action and the depth of information required for agents to make insights-based recommendations and spot and leverage upselling or cross-selling opportunities. At the same time, it ensures agents accurately reflect the brand in terms of vocabulary, tone, adherence to scripts and legal requirements.
As well as helping to fuel success, AI should be deployed to automate quality assurance to continuously evaluate and improve the performance of all agents. It should also constantly enrich initial training and ongoing coaching for continued alignment with best practices and customer expectations.
Independent agents still make a difference
This support needs to extend to independent agents who, even in the face of digital channel uptake, remain a cornerstone of insurance distribution. Insurers need to equip them with the quote and servicing tools and the wider support framework to make it easier and faster for independent agents to service customers. Their ability to make the type of human, emotional connection that increases customer loyalty remains a point of differentiation that should not be overlooked, even as the move towards direct sales continues at pace.
Maximizing ROI by prioritizing customer centricity
Insurers have relatively few opportunities to engage with customers compared with other industries. As such, any ongoing service interaction carries extra weight when it comes to strengthening loyalty, minimizing attrition or increasing customer understanding and, with it, actionable insights.
And again, the goal should be to equip teams with the capabilities they need to deliver empathy with speed and at scale. That means instant access to information for responding to queries or resolving issues and the same use of AI to automate the QA process and drive continuous improvement initiatives.
The ultimate moment of truth
For P&C insurers, the ultimate moment of truth, where a brand promise is most likely to be kept or broken, is the claims process. Nowhere is human empathy, understanding and reassurance more important in maintaining a customer relationship than in that first moment of loss. And again, those uniquely human capabilities need to be underpinned and augmented through the integration of technology. AI-enabled agents combine empathy with operational excellence by delivering against a customer’s emotional needs while ensuring they gather the right information, complete the correct processes and efficiently trigger the next steps.
A softening market is a critical time for carriers to differentiate at every stage of the customer journey. By enhancing the human touch with the power of AI and automation — across sales, distribution, service and claims — insurers can create meaningful, lasting relationships that go beyond price competition.