Introduction
Ninety percent of insurance carriers are rolling out some form of AI in 2025. Almost none of them are pointing it at customers yet. The data is messy, the regulation is unsettled, and the leadership talent needed to move faster is aging out of the industry. Michael Nadel has a view into all of it.
Nadel is a partner and head of the North American insurance practice at Simon-Kucher and Partners, where he advises carriers, brokers, MGAs, and the insurtech vendors who sell into them. He joined Josh Hollander to walk through Simon-Kucher's mid-year report on the five trends reshaping insurance strategy in 2025, from AI preparation and pricing model disruption to retention playbooks, household-level underwriting, and the carrier-broker compensation conversation that nobody wants to have out loud.
Guest Bio
Michael Nadel is a partner and head of the North American insurance practice at Simon-Kucher and Partners, a forty-year-old global strategy consultancy focused on growth and pricing strategy. He covers the full insurance ecosystem, advising carriers, agents, brokers, insurtechs, software providers, and TPAs. Before joining Simon-Kucher, Nadel ran the innovation function within the strategy group at CNA. He co-hosts an annual monetization masterclass at InsureTech Connect.
Key Topics
Carriers are preparing for AI, not deploying it
Roughly ninety percent of carriers surveyed plan to roll out AI or generative AI in 2025. The overwhelming majority are starting internally, not customer-facing. The barrier is not enthusiasm. It is data. Most carriers are sitting on decades of data that is unstructured, siloed, and not ready for AI to run on. The mid-year report shows heavy investment going into data warehouse modernization and cleanup before any AI use cases can be built on top of it.
AI pricing models are breaking the old SaaS logic
Per-user pricing made sense when the users were people. AI is designed to replace those seats, which means the more effective the product gets, the less revenue it generates under a headcount model. Simon-Kucher has developed a two-by-two framework to help vendors think through AI monetization: augment versus replace on one axis, proximity to the end transaction on the other. The top-right quadrant, where AI replaces humans and sits close to the transaction, is where outcome-based pricing is emerging as the dominant model. It is not without complexity, but it is where the market is heading.
Compute costs are the pricing mistake nobody sees coming
Early-stage AI vendors are systematically underpricing their products because they do not have a clear picture of what adoption will do to their infrastructure costs. The pattern is visible across the industry: launch pricing that looks attractive, then repeated revisions as compute costs become real. Vendors who price before they understand their own cost structure are setting themselves up for a margin problem.
Retention is the strategic priority carriers are underinvesting in
Acquiring a new customer costs roughly five times more than retaining an existing one. With insurance premiums rising across personal and commercial lines driven by catastrophe losses, tariff impacts, and supply chain pressures, shopping behavior is accelerating. The carriers investing now in predictive retention tools, bundling strategies, and proactive outreach ahead of renewal are the ones best positioned to hold their book while picking up shoppers leaving competitors.
The household is the new unit of risk
Carriers are starting to shift from thinking about Josh as a customer to thinking about Josh's household as a customer. The risk profile, the LTV calculation, and the cross-sell opportunity all look different when you underwrite the household rather than the individual. This shift has implications that extend further out into the autonomous vehicle era, where the insured entity may eventually be the vehicle rather than any person inside it.
The talent gap at the top of carriers is real and getting worse
The senior leadership layer in insurance is aging toward retirement and the pipeline behind it does not look the same as the one that got them there. Future insurance leaders will need technology fluency that their predecessors were never required to have. The expectation that the CIO or CTO owns the technology agenda is going away. Every C-level function, whether underwriting, legal, HR, or actuarial, will require deeper technology knowledge to stay relevant.
Disintermediation has already lost
The idea that AI will cut agents out of the distribution chain is not playing out. People across the country still want to do business with a local agent they trust. The conversation that is actually happening is about how carriers and brokers structure their partnership and compensation in a way that keeps both sides productive and aligned.
Notable Quotes
"AI is no different than many of the other systems. If it's garbage in, you're going to get garbage out."
"You can see the problem with that is as your solution gets more effective, you actually make less money because there's less people to charge for it."
"Acquiring a customer is around five times the cost of retaining an existing customer."
"The notion that the agent is dying has died on its own."
"Whatever field you're in, even if you're the chief legal, HR, underwriting, risk, actuary, you're going to have to have a deeper knowledge of technology in order to stay relevant."
Resources
Guest:
Simon-Kucher and Partners: https://www.simon-kucher.com
Michael Nadel on LinkedIn: https://www.linkedin.com/in/michael-nadel-13656123/
Host and Organization:
Joshua R. Hollander on LinkedIn: https://www.linkedin.com/in/joshuarhollander/
Horton International (USA): https://www.horton-usa.com/
Insurtech Leadership Podcast: https://www.linkedin.com/showcase/insurtech-leadership-show
Subscribe and Review
If you enjoyed this episode, subscribe on your favorite platform and leave a review. The Insurtech Leadership Podcast is available on YouTube, Apple Podcasts, and Spotify.