Artificial intelligence is moving from the sidelines to the core of the insurance business. In 2026, industry experts expect AI to stop being a support tool and start acting as the engine that runs insurers’ daily operations.
So far, many insurers have treated AI like a new app they are still testing. That is set to change. From underwriting to claims and fraud detection, AI is expected to shape decisions in real time. Some large insurers are already planning to phase out traditional policy administration systems. Instead, they are exploring AI “copilots” that allow staff to interact directly with data, cutting costs and speeding up decisions.
Insurance Agentic AI
Claims handling is one area likely to see fast change. Simple claims could be settled within minutes by AI agents. This speed, however, comes with risks. Bias, security gaps and cyber threats remain major concerns. SAS experts say insurers that invest early in strong AI governance will be better placed to protect customer trust.
Actuarial work is also evolving. AI-powered models are improving accuracy across the policy life cycle. This could help insurers narrow the global protection gap, estimated at $1.8 trillion, while coping with rising climate and economic risks.
Underwriting is expected to shift too. Instead of fixed rules, insurers will rely on AI systems that learn from long-term customer data. Risk assessment will become more dynamic, adjusting as lifestyles and conditions change. Transparency and explainability will be critical to making this work.
Climate change remains a growing threat. More frequent losses may push premiums higher, and some insurers could exit high-risk markets altogether. As a result, coverage gaps may widen further.
Fighting AI-Generated Fraud
Fraud is another pressure point. As criminals use AI to fake identities and documents, insurers are likely to adopt specialised tools rather than single, end-to-end systems. At the same time, regulation is becoming more complex, especially in the US, where states are taking the lead on AI rules.
Cyber insurance continues to grow fast. Insurers are moving toward deeper, client-by-client risk checks, rewarding strong security and rejecting weak controls. The message for 2026 is clear: AI will shape not just how insurers work, but who succeeds.
