Policy Admin in 2025: Speed, AI, and Buyer Leverage

Faroe just published its State of Policy Administration 2025 white paper. Here is why you should read it.

Policy administration finally crossed a threshold in 2025. Five structural shifts hit at once: AI moved from slides to production, implementation timelines collapsed, vendor economics compressed, buyers regained leverage, and composability overtook monolithic suites as the preferred narrative. For insurance leaders, the consequence is clear: time to value is now a competitive weapon, but only if you pair speed with disciplined architecture and measurable outcomes.

AI is the headline. Federato’s agentic underwriting proves that automated decisioning can triage a majority of submissions with high accuracy, while Socotra and others shipped configuration copilots that cut rule changes from weeks to days. These tools are real and useful. They are also bounded by data quality, digitized guidelines, and operational maturity. The message for executives is to invest as much in clean data, rules governance, and workflow instrumentation as you do in AI licenses. Otherwise the productivity gains stall on impact.[

Speed is now table stakes. Duck Creek’s guaranteed 90 day MGA package catalyzed an industry wide reset, with rivals launching similar fast track offerings. The catch is the same across vendors: you get speed by adopting standardized workflows and deferring customization. For MGAs and simpler carriers, that trade can be excellent. For complex operations, the 80 percent fit may put core advantages at risk. The strategic work is to decide which workflows are sacred and which are habit. Treat this as a portfolio decision, not a single platform decision.

Pricing and packaging are shifting under your feet. Usage aligned models like GWP and per transaction fees sound elegant, yet often move pain rather than remove it. Marketplaces unbundle once included integrations and can create surprise total cost. At the same time, the industry faces an AI gating dilemma. If vendors lock premium AI behind enterprise tiers, challengers will disrupt from below by democratizing access. If they democratize, enterprise pricing compresses. Either way, you gain negotiating leverage if you pin vendors to tier by tier AI commitments in writing.

Composability is the new promise. In practice, it increases architectural responsibility for the buyer. You must decide where business logic lives, who owns the golden record, and how to manage API versioning and event flows across systems. Large carriers and highly technical MGAs can thrive here. Others should be pragmatic and cost the integration tax before chasing best of breed everywhere.

A final note on power. The coreless debate is less about technology than control. Whether or not you adopt an orchestration layer in the near term, the conversation is a lever to secure stronger APIs, data portability, and modular pricing. Use it.

Practical Takeaways

• Treat AI as an operating system for work. Fund data hygiene, rules digitization, and measurement alongside AI features.
• Demand AI transparency. Ask for production references, accuracy metrics, and tier entitlements written into contracts for the next 24 months.
• Decide your workflow portfolio. Standardize for speed where differentiation is low. Preserve customization only where it truly drives loss ratio, expense, or growth advantages.
• Model total cost, not unit price. Include integration, configuration, marketplace fees, and support ownership in your TCO.
• Plan your data and logic ownership. Specify the system of record per domain and document event flows before you sign.
• Use leverage at renewal. The 90 day market reality and AI ambiguity are negotiation assets. Convert them into price and capability commitments.

Reference: “State of Policy Administration 2025” in State of Affairs.