Will McAllister, Senior Vice President and Managing Director of EMEA, Guidewire
The European insurance industry is navigating strong waves of change. These range from unpredictable geo-political tensions and extreme weather events, to soaring operating costs and how modern technology – especially AI – is reshaping our society and economy.
So how do customers judge their insurer and the innovative steps in modern technologies, services, and products that insurers are taking to be more effective in meeting customer needs?
Some answers can be found in our latest annual European Insurance Consumer Survey, which has been tracking insurance customer attitudes since 2020.
Customers Like Insurers More, But No Room to Relax
This year we’re reporting a swing in positive sentiment from customers towards their insurers – nearly 1 in 3 say that insurers understand them and they value their products. This is a sizable change from 2024 when 24% of respondents said this and this positive sentiment is 12% points higher than it was in 2022. Conversely the percentage of European customers who do not think the insurance industry does enough to help people in need has fallen from 29% in 2024 to 19%.
What may be driving this is how customers are turning to and receiving help from insurers in greater numbers. More than one in three (36%) customers who we surveyed said that they had made a claim in the last 12 months, an increase from 31% in 2024 and 27% in 2022. This may reflect how many customers were affected by extreme weather events in Europe in the last 12 months. Notably, German and Spanish customers make up a great deal of this increased claims volume.
But the industry cannot be complacent and needs to listen carefully to what customers need and want.
Consumers remain cautious about their spending. One in five customers say that they are likely to cut their spending on insurance because of rising costs. Even if money is not a factor, policy switching is high with four in ten (40%) of those surveyed saying that they are likely to cancel their policy and switch to another insurer.
Additionally, it is essential to acknowledge that while the increase in trust is notable, there’s plenty of room for improvement. The great potential of technology, data, and AI in moving towards more preventative measures depends on higher levels of customer trust. And a stronger trust environment enhances customers’ willingness to share personal data, essential for tailoring policies and providing preventive advice.
Insurers should therefore focus on a “race towards trust,” recognising that higher trust levels could increase customers’ motivation towards data sharing. Leveraging such data can then lead to better product offerings, resulting in enhanced customer retention, reduced acquisition costs and loss expenses, and an improved combined ratio. Achieving this level of service excellence could further support in boosting trust, creating a virtuous cycle that benefits both insurers and insured alike.
Customers Like Innovation – But On Their Terms
Rising claims volumes and operational costs, plus the challenge of new customer acquisition means insurers need to be more agile and adaptable to change. The strategies that insurers could embrace include considering new product models to greater use of AI and automation.
The good news is – with some important caveats – customers are increasingly comfortable with insurers taking more innovative steps.
Interest in how insurers can use technology to offer new services has grown year on year. For example, customer appeal for smart tech early warning services to alert them to potential damage before it happens has risen from 71% in 2022 to 80% in 2025. These kinds of services, which also include usage-based insurance, help control claims costs and create a closer positive bond between customer and their insurer.
Extreme weather is a risk that customers are most worried about and insurers can fulfill a positive role in helping customers understand the risks, provide support and prevent losses.
The severity of flooding, wildfires, and other natural catastrophes are leading consumers to consider whether insurance policies properly cover these risks. More than a third of European insurance customers (38%) say they are considering purchasing insurance to cover damage from climate risks, which gets closer to one in two customers in Spain (47%) and Germany (44%).
If they want to support their customers, insurers need to help them quantify and understand the risks they face. In doing so, insurers can offer proactive support and new products that will make their policyholders more resilient and improve the value they deliver to customers.
Anxiety about AI Receding
A bigger prize for insurers in pursuing innovation is how much customers will accept insurers using generative AI, machine learning and automation – developments which could be transformative to operational efficiency and productivity as well as service quality. While there remains some anxiety, the fact that more customers are using generative AI tools in their everyday life means comfort with insurers using the same technology is growing.
It is important that insurers understand how their customers perceive the benefits and risks of AI. The number of customers who are comfortable with insurers using AI to decide the price of an insurance policy without human intervention has increased from 31% in 2024 to 37% in 2025. When it comes to claim processing, there has been an increase in consumer comfort levels – from 30% in 2024 to 33% this year. However, consumers still want to be able to refer to a human if they feel their AI chatbot is letting them down. When looking at what would make people more confident in insurers’ use of AI, the ability to refer an AI decision to a human operator if they disagree is still the principal factor (40%).
Another crucial consideration for insurers is the extent to which consumers are comfortable with their data being used to support the wider use of AI and other technologies. Here the answer is more complicated. The number who say that they do not understand why insurers would collect data from connected devices to better understand risk and see it as an invasion of privacy has risen from 19% in 2024 to 24%. While it was higher in 2022 (27%) it had subsequently fallen, suggesting a reversion back to a more privacy-conscious mindset.
Trust in how insurers collect and use data must be cultivated over time. If customers can see direct value in personal data sharing in terms of more personalised services and hassle-free processing of claims, then this negativity will recede.
The insurance industry is displaying real resiliency and greater relevance for customers in times of heightened geopolitical and economic tensions. This is creating better conditions for insurers to proceed with their modernisation and digital transformation programmes, though they must remain receptive to customer concerns.
