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As the industry faces familiar challenges, experts foresee AI becoming the engine that drives the business.
As insurers have entered the AI age, they’ve regarded the technology as something like a hot new phone app: They know they want it, but they are still figuring out the best way to use it.
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For 2026, SAS’ industry experts foresee a breakthrough year in which AI will become central to how insurers operate – no longer as an accessory, but as something like the business’s operating system, powering functions from underwriting to claims decisions.
Even as the industry is poised to embrace this technological transformation, though, it continues to face growing challenges from climate change, economic turbulence, and regulatory volatility that could threaten the future of insurance.
Here are some industry forecasts from SAS experts:
“A Fortune 500 insurer will begin phasing out policy admin systems in favour of insurance copilots in 2026. Some large insurers have already signalled their intent to invest big in AI technologies. And SAS’ survey data shows that insurance executives have a high level of trust in generative AI – twice as high as for machine learning, in fact. Policy admin systems require substantial investment and upkeep. However, interactions with data through copilots can eliminate the need to utilise those admin systems to underwrite policies or settle claims,” ̴ Franklin Manchester, Principal Global Insurance Advisor.
Companies installing robust AI governance will earn and protect that trust
“Many straightforward insurance claims will be settled in minutes by agentic AI. In order to safeguard customers’ trust, though, insurers will need strong AI governance. That means ensuring that their AI platform has the security controls and governance to minimise risks, from accidental bias in claims decisions to exposure to cyberattacks.
“The companies that install robust AI governance will earn and protect that trust. Building systems that act fast – and act right – will define the leaders of the next decade,” ̴ Alena Tsishchanka, Global Customer Advisory Director.
Underwriting will move from rule-based to relationship-based AI
“Insurers will lean harder into AI-powered actuarial modeling and decisioning. This will result in improved accuracy, speed and efficiency across the policy life cycle, from underwriting through claims. The opportunity is twofold: meaningful progress in narrowing the industry’s $1.8 trillion protection gap and greater resilience in the face of escalating climate risk and economic volatility,” ̴ Stu Bradley, Senior Vice President of Risk, Fraud & Compliance Solutions.
“Underwriting will move from rule-based to relationship-based AI. Insurers will rely on AI systems that learn from longitudinal customer data rather than static rules. This shift will turn underwriting into an ongoing dialogue between models and customers, recalibrating risk dynamically as lifestyles evolve. The winners will be those who embed explainability and ethical transparency into these adaptive models,” ̴ Oana Avramescu, Senior Manager of Insurance Industry Consulting.
Insurers will seek out the best individual AI tools
“The accelerating pace of climate change will cause increasing damage. Insurers must increasingly evaluate their business outcomes and adjust their risk exposure accordingly. This can be achieved by optimising reinsurance strategies, but there’s a good chance customers will see more expensive premiums, and insurers may even withdraw from specific business areas. Consequently, the global insurance protection gap is likely to widen further,” ̴ Thorsten Hein, Global Advisor for Insurance Product Innovation.
“Insurers will seek out the best individual AI tools rather than one end-to-end solution. As fraudsters use AI to create false identities, documents and images to support fraudulent claims, insurers will be looking for best-of-breed tools – rather than all-encompassing end-to-end solutions – to help detect these risks and reduce related losses.
“2026 will also bring an increased focus to improving investigations, with insurers looking to augment their current detection efforts with solutions that include the use of copilots and AI agents to help automate processes and drive efficiencies, allowing investigators to do more with less,” ̴ Nick Feast, Principal Business Solutions Manager for Risk, Fraud & Compliance.
“In the US, states will take the lead in regulating AI. AI regulatory compliance will become more complex, with more states enacting regulations. Leading insurers will embed oversight and compliance features into their AI and modeling programs,” ̴ James Ruotolo, Senior Director of Presales Support.
“Cyber insurance, already a $16.3 billion global market, will continue to grow rapidly. As the market becomes more sophisticated, insurers will move from generalised actuarial modeling for cyber to more targeted technical underwriting on a client-by-client basis. Insurers will increasingly favour those clients that exhibit and enforce proper security controls and governance while denying clients that do not,” ̴ Norman Black, Insurance Industry Solutions Director, EMEA.
