In the first of a two-part series, Amit Deshpande, Informatica’s Data Platform Leader – Cloud Integration Sales, highlights the variety of threats currently facing insurers in the UK, and what they can do to weather the storm.

If you're in the UK insurance business in 2025, things are probably a little tight right about now. Margins are shrinking, costs are rising, regulatory pressures keep evolving and consumer expectations continue to shift. Between economic volatility, rising fraud, customer expectations and compliance mandates, the insurance industry in the UK is under siege, with very few of “the old ways” still standing up to changing times.

So, what's going wrong, and how come things seem worse than ever?

Let's break it down.

Insurers are seeing an alarming increase in claims volumes and costs. The reason?

• The cost-of-living crisis has made so many customers delay home repairs and vehicle servicing, creating worse severity in claims.
• NHS backlogs put pressure on private health insurance, resulting in increased claims spending in the health and life sectors.
• An increase across the board in fraudulent claims at a cost of over £1.2 billion per annum to UK insurers, with detection often an uphill struggle for many companies.

Efficiencies in processing claims at the same time as increased accuracy in detecting fraud must be made for to enable insurers to stay afloat. This is much easier said than done though. Many insurers still operate in data silos, use manual fraud detection, and have slow claims assessment processes, meaning higher loss ratios and customer dissatisfaction.

In a very unstable economy, risk pricing becomes everything; however, many underwriters are not presented with complete, up-to-date, and centralised information on which they can base their decisions. Consequently, this leads to:

• Incorrect risk pricing, which ends in unprofitable policies.
• Under-pricing in competitive markets leads to revenue spillage.
• Overpricing low-risk customers, thus driving them to digital-first competitors.

Modern underwriting requires that the risk be assessed in real time, has AI-driven insights, and better integration of data. Unfortunately, legacy systems, bad political data governance and the lack of automation keep underwriting teams at risk of pricing errors and disruption in the market. 

On top of such dilemmas comes increasing pressure by regulators on insurers. The hot topics of the day, namely IFRS 17 reporting, new Consumer Duty regulations and constantly evolving AI governance frameworks are putting compliance teams under greater stress.

The biggest problems include:

• Most insurers don’t have a single source of truth for regulatory reporting.
• Compliance-related data is often scattered over several systems in error-prone reports.
• AI adoption is growing, but without strong governance and explainability, it creates new compliance risks.

With the increase of fines due to misreporting and non-compliance, insurance firms must secure the accuracy, traceability and audit readiness of their regulatory data which, unfortunately, remains work-in-progress for many. 

Many insurers try to solve their challenges manually via traditional methods, including using old systems, and with fragmented data sets. Unfortunately, these traditional methods can cause problems, as they:

• Use too much time – Insurers cannot afford claims processing cycles that last a couple of months.
• Are not scalable – The intensity of regulation is on the rise, demanding automatic compliance from the insurers.
• Do not allow for real-time insights – Decisions concerning risks need to be taken on trusted data available in real-time.

What's the way forward then?

In the modern era, insurance fraud is not only detected after the fact, but rather, fraudulent claims are forecasted and mandated for prevention, even before payouts are made, by the use of AI-backed data insights.

So, how does that work?

• Real-time fraud detection: Integration of data from historical claims information, policyholder records, and third-party sources enables the immediate recognition of suspicious patterns.
• Using AI for claims automation: This solution reduces processing by 40%  to settle legitimate claims faster while blocking fraudulent ones.
• Data enrichment: Application of external risk indicators to assess claims legitimacy in the pre-settlement phase.  

The most accomplished insurers put real-time, accurate, and enriched data at their underwriters' fingertips.

This is how they achieve it:

• AI-based risk assessment: Bringing together internal and third-party data to generate real-time insights into risk exposure.
• Automated data validation: Giving underwriters a constant supply of clean and trusted information for pricing models.
• Improved M&A integration: Seamless amalgamation of data from the Target companies/insurance books to ensure underwriting post-merger scalability.

The result? Faster, accurate risk decisions; reduced underwriting losses; and increased profitability. 

Regulatory reporting is being made easier for those insurers who automate their data governance and compliance processes.

• IFRS 17 and Consumer Duty compliance made easy: Audit-ready data will ensure accurate reporting and reduced regulatory risk.
• AI governance frameworks: AI models used in claims and underwriting must be completely explainable and compliant. Additionally, securing the APIs that connect AI systems to customer and claims databases is essential for maintaining GDPR compliance and protecting policyholder information from unauthorized access.
• Automated lineage tracking: Providing regulators with proof for the accuracy of data with no manual efforts.

Replacing manual compliance with automated AI organisations earns back 50% of reporting time while ensuring 100% compliance for the insurers.

Informatica helps insurers turn data into a competitive advantage by:

• AI-enabled fraud detection and claims automation
• Real-time data integration for underwriting and risk
• Automating data compliance from end-to-end with audit-ready data

We are more than just data management solutions; we are about profitability, efficiency, and compliance, so that insurers grow.

If these challenges resonate with you, you are not alone. The good news? They can be solved.

Let’s discuss how smarter data can give your business a bright future.

Reach out to our team to discuss possibilities.

To understand more about how Informatica can help insurers, read Informatica and the Insurers' Tech Stack: Technical Addendum.