5 AI trends reshaping insurance in 2026

<p><b>The technology has quickly become the animating force behind industry conversations—and that will continue this year.</b></p>

<p><i>This article was originally published in</i> <a href="https://www.carriermanagement.com/" target="_blank" rel="noopener noreferrer">Carrier Management</a> <i>in January 2026.</i></p> <p>Insurers are famously slow to sign on to emerging trends and technology. This cultural tendency to take the long view is often helpful, as actuarial science plays out over years if not decades. The recent emergence of AI is a rare exception. What started as a parlor trick, a technology-driven successor to the Magic 8 Ball, has quickly become the animating force behind industry conversations.</p> <p>We believe this enthusiasm is rational due to AI's unique applicability to the data-driven world of insurance and its suitability for solving some of the industry's most vexing problems. Here are five AI trends we expect to play out in insurance in 2026.</p> <h5><span class="text-bold-italic">1</span>.&nbsp; &nbsp; AI will accelerate the strategic mashup of business and technology</h5> <p>Over decades, we have witnessed tension between business and technology strategies in insurance. While technology has long been viewed as a key enabler of insurance businesses, within most firms there has also been a sense of separation—rather than complete partnership and cooperation—caused by leadership silos and conflicting incentives. Businesses created their market and product strategies, then handed them to IT departments for execution in a complicated technology landscape woven from both legacy and &quot;modern&quot; components.<br> <br> The emergence of AI has accelerated a more holistic view in which technology and business strategies are designed and executed by leaders in much tighter cooperation, seeking a blend of cost optimization and growth. A quarter of global enterprises now have a Chief AI Officer. The bar for performance has been raised across the board, with AI as a central enabler of lower cost and improved service.<br> <br> </p> <h5><span class="text-bold-italic">2</span>.&nbsp; &nbsp; A flywheel effect will drive AI development down additional, productive paths</h5> <p>AI development has skyrocketed over the past 24 months, in part due to the emergence of a flywheel effect. Generative AI burst on the scene via powerful, multipurpose large language models (LLMs). Other AI applications appeared in quick succession, driven by a combination of expanding capabilities and broadened awareness among both consumers and business users. We are at the dawn of an agentic age, with autonomous agents taking on tasks for their human owners.<br> <br> In 2026, we will see coordinated agentic activity, with agents intelligently managing other agents to dramatically boost their impact. We are not far from insurance applications of contextual AI, where agents have enhanced awareness of the environments in which they are deployed. The frenetic pace of discovery will not slow in the foreseeable future.<br> <br> </p> <h5><span class="text-bold-italic">3</span>.&nbsp; &nbsp; Horizontal AI investments will dominate, but the insurance sector will accelerate</h5> <p>The arms race will clearly continue among the horizontal players in AI, such as tech giants and hyperscalers. The next five years could see trillions spent creating the most capable LLMs, agents and agentic management consoles imaginable. But with thousands of proofs of concept under its belt, the insurance industry is poised to capture an increasing share of investment.<br> <br> Top 20 insurers, in particular, are seeking new ways to leverage their data, with the twin goals of operational efficiency and better understanding of risk. Private equity decision-makers also smell a potential win, which will incent them to consider investing in distribution plays (e.g., consolidation of agents, brokers, MGA, MGU) and InsurTechs that seem poised to fundamentally alter how insurers function. For this data-rich and relatively slow-moving industry, the upside of AI has become impossible to ignore.<br> <br> </p> <h5><span class="text-bold-italic">4</span>.&nbsp; &nbsp; AI will change the core systems modernization conversation</h5> <p>Complex legacy insurance environments are hard to modernize. Many core systems—policy admin, underwriting, claims systems—are several decades old, and the business logic and rules within them are expensive to extract. There are also complex integrations to consider. As a result, the business case for core system modernization or replacement is often suspect.<br> <br> The arrival of advanced LLMs and natural language interfaces will cause insurers to reconsider these dynamics. Extracting rules and logic, and representing them in systems with a modern, modular architecture, is now easier than ever. Leaving the original systems in place and querying them via agentic tools is another possibility. In addition, with a focus on user and channel experience, alternative strategies and platforms (e.g., Salesforce, ServiceNow) will challenge conventional wisdom about the primacy of core systems. We will see fundamental shifts in core systems modernization strategies in 2026.<br> <br> </p> <h5><span class="text-bold-italic">5</span>.&nbsp; &nbsp; AI's next phase will trigger a pendulum swing toward human centricity</h5> <p>AI-driven applications reflect the demands of specific lines of business and product and distribution strategies. For example, use of AI in personal auto insurance focuses on data-driven pricing and claims automation, whereas in benefits the focus is next-generation needs assessment or enrolment tools.<br> <br> But regardless of the application, we believe an anchoring theme for AI in 2026 will be the creation of human centricity and empathy across participants (i.e., employees, customers and business partners). It is ironic, but the path toward insurance processes that feel more connected and human at scale must go through AI-powered tools that improve both efficiency and the feeling of personalization.<br> &nbsp;</p>