2026 Outlook/Predictions
5 ways insurers will prioritize AI and customer experience in 2026
Insurers will prioritize customer experience in the coming year as declining customer satisfaction reveals the need to focus on retaining clients.
That was among Forrester’s predictions for the insurance industry for 2026.
Meanwhile, the increased use of artificial intelligence to boost operational efficiency will result in a significant shift for the insurance industry. In addition, cyber insurance will expand rapidly to combat new threats brought on by AI. Insurers will re-enter high-risk property markets, thanks to new underwriting techniques. And micro-insurance providers will find new opportunities in the growing gig economy.
Here are Forrester’s five predictions for 2026.
- Property/casualty insurers will boost their investment in customer experience to increase customer engagement. Forrester’s Customer Experience Index scores for auto and home insurers in the U.S. fell in 2025. Declining customer satisfaction was fueled by double-digit rate increases. Growing mistrust and frustration also led to challenges with customer retention. Carriers identify customer experience as a key driver of financial performance and a way to differentiate themselves from competitors.
- Cyber insurance will grow as new AI threats and data needs emerge. Forrester said cyber insurers should move beyond providing financial protection and become proactive partners in cybersecurity by providing cyber defense services, risk mitigation tools, and innovative ways to underwrite new risks posed by AI.
- Expense ratios at the top 50 insurers will decline due to AI and automation. Insurance growth is slowing globally after a strong 2024, Forrester said. Carriers are doubling down on automation with at the center of this shift, streamlining claims and back-office processes.
- An insurer will re-enter the California or Florida property insurance market in a novel way. The rising frequency and severity of natural disasters, coupled with social inflation have discouraged carriers from operating in the California and Florida property insurance markets. But Forrester predicts that techniques such as using IoT devices and smart home data, along with incentivizing risk mitigation and home hardening, will allow insurers to create personalized protection products for these high-risk markets.
- Micro insurance will expand by 5% as the gig and freelance economy expands. Forrester said the gig economy is expected to surpass $600 billion in 2025 and continue growing. As more professionals rely on project-based income without traditional employer benefits, the need for affordable, flexible protection is increasing and creating strong demand for alternative insurance solutions. To serve gig workers, insurers must gig workers on coverage value, simplify onboarding and use digital channels to deliver modular, low-cost protection that fits flexible work patterns.
Forrester recommended carriers craft an AI strategy that targets cost efficiency, prepare data for AI and automation, and embed AI into core operations to drop expense ratio.
News
AM Best revises outlook for US homeowners insurance to stable - Reinsurance News
Credit rating agency AM Best has revised the outlook for the US homeowners insurance segment to stable from negative, citing moderating premium growth and enhanced catastrophe risk management practices amid improved property reinsurance market dynamics.
am-best-logoAccording to the Best’s Market Segment Report, the market has remained resilient despite elevated catastrophe losses in the first half of 2025, with the third quarter being exceptionally quiet in terms of hurricane activity.
AM Best stated that the revision reflects several positive trends that are helping carriers navigate a challenging environment. These include improved capitalisation, rate adequacy, coverage modifications, and reinsurance stabilisation.
The demand for homeowners’ coverage remains strong due to heightened claim activity attributable to extreme weather and general economic and political uncertainty.
Additionally, premium growth remains strong, though the pace has slowed compared to the previous year, with increases stemming from rate activity and a greater need for expanded coverage.
Research
2025 U.S. Claims Digital Experience Study | J.D. Power
Proactive Status Updates an Area for Improvement
The nation’s auto and home insurance providers have spent the past decade encouraging customers to submit claims and manage the estimate and status updates through their mobile apps and websites. How effective are these digital tools in delivering on that promise?
According to the J.D. Power 2025 U.S. Claims Digital Experience Study,SM released today, customer satisfaction surges when the claims process is managed digitally, but most customers still find themselves needing to go offline to manage key steps along the way.
“Across the insurance claims workflow, from first notice of loss to the estimate and ongoing status updates, customer satisfaction scores are highest when customers are able to manage the process via their insurers’ digital apps and websites,” said Mark Garrett, director of global insurance intelligence at J.D. Power. “However, the study reveals several key moments in the claim journey when customers need to move across channels to get more detailed explanations from claim representatives or seek status updates. The more insurers can anticipate the information customers will need and proactively deliver it digitally, the more satisfied—and brand loyal—their customers will become.”
Following are some key findings of the 2025 study:
- Customers look for more proactive digital updates: Receiving adequate digital updates is one of the top drivers of customer satisfaction with the digital insurance claims process, but insurers deliver on this key performance indicator just 22% of the time.
- Apps underutilized for delivering status updates: Overall satisfaction scores are highest when customers receive status updates via their mobile apps. However, just 36% of auto insurance customers and 31% of homeowners insurance customers currently receive status updates this way. Most customers still receive updates via email, calls from insurer claim staff or text messages.
- Disconnected customer experience: Despite widespread industry efforts to promote digital-first notice of loss and claims management, 22% of customers still rely on multiple channels to find answers to the same question.
- Digital experience directly linked to customer loyalty: Among auto and homeowners insurance customers who rate their digital claim experiences as “poor” or “just OK,” 52% are likely to leave or not renew with their current carrier. Among those who rate their digital experience as “excellent” or “perfect,” just 4% are at risk of attrition.
AI in Insurance
AI in insurance is now mainstream, says WTW's Doddington
WTW, an advisory, broking, and solutions firm, has been closely tracking the adoption of artificial intelligence (AI) in insurance, and has highlighted how carriers are now deploying related technologies at a more rapid pace.
Laura Doddington, WTW’s North American Head of Personal and Commercial Lines in Insurance Consulting and Technology, explains how insurers are moving from experimentation to widespread implementation of AI to improve operations, reduce costs, and provide more personalised customer services.
Doddington explains that the use of AI across marketing, pricing, underwriting, and claims is not new, but insurers are now quickly exploring and deploying generative AI technologies.
She commented: “We are no longer the laggards of the financial services sector. Insurers have increasingly dedicated AI R&D resources focused on identifying where the best opportunities are for its use across the insurance value chain, and, frankly, they have little choice!”
Over the years, pricing teams have relied on advanced statistical methods such as generalised linear models to predict claim frequencies, claim severities, retention, and conversion rates. Platforms like WTW’s Radar have helped insurers rapidly build, refine, test, and deploy these models. Doddington notes that while these approaches remain central because of their transparency and explainability, AI has added a powerful new dimension to analytics.
Majesco Quadruples AI Investment to Accelerate P&C Roadmap
Majesco (Morristown, N.J.) has announced a significant increase in AI-related investment for 2026, reaffirming its strategic focus on the property/casualty insurance segment. The company will quadruple its AI investment to accelerate development of its next-generation, AI-native SaaS cloud platform for P&C insurers.
The announcement follows Majesco’s recent expansion in life and annuity/health (L&AH) and is intended to strengthen its product roadmap, speed of delivery, and business value for P&C customers.
“The recent investment and expansion in our L&AH solutions reflects an opportunity to serve and bring AI-native solutions to more of the insurance industry—not shift away from P&C,” comments Manish Shah, President and Chief Product Officer, Majesco. “Our substantial increase in P&C investment in 2026, quadrupling our AI efforts, will deliver an AI-native platform that enables insurers to move faster, operate leaner, compete better, and innovate confidently. Our message is simple: Majesco’s P&C leadership is growing, our innovation is accelerating, and our customers will feel the impact in months, not years.”
Majesco states the investment will support development across core, data, and experience layers of its P&C platform, including advancements to Majesco Copilot and its agentic AI capabilities. The focus is on reducing implementation timelines, increasing self-service capabilities, lowering total cost of ownership, and embedding continuous intelligence across underwriting, billing, policy, claims, and loss control.
Why AI-Driven Claims Management Is the New Standard
Claims professionals are under pressure. Policyholders now expect immediate service, yet many insurers are still weighed down by paper-heavy workflows and legacy systems. As premium rates climb and claim severity rises, customer churn is accelerating—making AI adoption a competitive necessity.
AI is helping insurers process claims faster, spot fraud earlier, and support compliance demands for transparency and fairness. Lemonade uses AI to approve simple property claims in minutes. Allstate automates communications to reduce complexity and improve the customer experience. These use cases reflect broader trends where automation enhances both efficiency and satisfaction.
For adjusters, the shift is practical. AI tools are reducing the time spent on intake, form classification, and system navigation. Real-time decision support presents claim history and policy data instantly. Fraud detection algorithms surface suspicious patterns that guide investigators toward high-risk cases. These technologies free adjusters to focus on what matters most—building trust and resolving problems.
The story highlights the growing gap between carriers that embed AI into daily claims workflows and those that cling to manual processes. Research from Frontiers in Artificial Intelligence underscores the urgency: AI is already transforming underwriting, fraud, and claims across the industry. The risks of delay are not just operational—they’re existential.
Insurance's new operating system for 2026: AI
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.
Looking ahead to 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 .
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. Looking ahead to 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.
There are still a few weeks to go before the new year, but there's no need to wait for a slow restart. Let's boot up those industry forecasts from SAS experts now:
A Fortune 500 insurer will begin phasing out policy admin systems in favor of insurance copilots in 2026. Some large insurers have already signaled 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 utilize those admin systems to underwrite policies or settle claims.
Stealth-Mode Startup Wamy Unveils AI Workforce Platform for Property & Casualty Claims
Wamy announced its official launch after operating in stealth mode, introducing the industry's most powerful AI Claim Intelligence Platform.
Wamy functions as an AI workforce that transforms manual and fragmented property claim and litigation work into clear, connected, and intelligent workflows.
Designed for carriers and litigation teams that manage property and casualty (P&C) claims, Wamy helps organizations shift from reactive file handling to proactive, intelligence-driven decisions. The platform reads every document, listens to deposition audio, analyzes photos, validates coverage, identifies inconsistencies, and recommends next steps in seconds.
A New Category: AI Claim Intelligence
"Property claims have a real accuracy and capacity problem," said Edgar Harutyunyan, CEO and Co-Founder of Wamy. "Professionals often spend 15 to 20 hours just to understand a single file. They review policies, photographic evidence, estimates, emails, reports, and more. Errors slip in, delays accumulate, and disputes escalate. Wamy changes this by acting as an AI workforce that processes the entire claim instantly and brings structure and clarity to every case."
Wamy is built specifically for property claims and property litigation. It understands insurance language, interprets damage photos and contractor estimates, identifies missing or conflicting evidence, and performs actions such as drafting documents or summarizing calls.
"Think of Wamy as a coordinated AI workforce," Harutyunyan added. "Its specialized agents work across the entire file. This is not automation for a single task. It is intelligence across the whole claim."
Turning Raw Claim Data Into Clear Knowledge
Wamy combines three layers of intelligence into one platform:
- AI Workforce (Wamy Agents): Handles intake, policy review, estimate comparison, evidence extraction, call summarization and compliance tracking.
- Document and Evidence Intelligence: Reads PDFs, emails, reports, photos, videos, and audio, identifying facts, conflicts, and missing information.
- Claim Intelligence Layer: Scores risk, surfaces insights, highlights issues, and ensures requirements and deadlines are met.
Pilot fatigue is real: 3 Steps insurers can take to make AI work better
For all its transformative promise, AI isn’t working out for a lot of organizations. In fact, a reported 95% of generative AI pilots are failing.
Those misfires send many organizations back to the AI drawing board, which kicks off a cycle of rollout, regroup, and repeat that often leads to pilot fatigue. Staff members resist new projects or tools and start asking: “Why do things seem so much more complicated when AI was supposed to make them better and easier?”
That kind of reinforced skepticism can be particularly damaging in an industry like insurance, where many organizations already tend to approach AI with a “prove it” attitude. For these cautious insurers, failed pilot projects certainly don’t do anything to build AI’s case. But AI’s potential to speed up and optimize areas like policy and claims review is too great to write off the technology over a few misses. Here are three ways to avoid pilot fatigue and make sure it doesn’t become the defining trait of your organization’s AI journey.
Insurers Face an AI Talent Gap | Insurance Thought Leadership
Talent shortages, not technology limitations, threaten insurance modernization; 62% of CEOs say workforce gaps are hindering growth.
Insurers are racing to modernize their operations, yet the greatest constraint isn't the technology itself. It's whether teams are prepared to use it. According to KPMG, 62% of insurance CEOs believe talent gaps could hinder growth over the next three years. Automation, data tools, and AI only move the needle when employees understand how to work with them, make informed decisions, and adapt to new ways of delivering value.
That's why workforce development has become central to every corporate transformation effort. Carriers can't rely on hiring alone. To grow sustainably, insurers must inspire and engage existing employees to grow into the roles today's advanced technologies require. How to do this? Focus on strengthening digital confidence, designing clearer pathways for career advancement, and creating a culture of learning.
Patrick Donovan is chief operating officer at InStride.
Insurance Customers Skeptical About AI Processes and Benefits
While insurance consumers may be warming up to artificial intelligence, 68% say they believe the insurance company gets most of or all the benefits of AI adoption.
AI is becoming more ingrained and accepted as part of the insurance industry’s interactions with insureds. However, while consumers recognize the potential value of AI, they have serious doubts about how investing in AI technology will offer better results or lower costs for them.
Cyber Risk
AI, Deepfakes, and Data Suppression Redefine Cyber Risk in 2026
As we approach 2026, Resilience’s latest cyber risk report delivers a stark forecast for claims adjusters, insurers, and risk professionals: artificial intelligence is not only transforming cyber threats but also magnifying their impact, speed, and scale. From deepfakes indistinguishable from real video to fully automated social engineering campaigns, attackers are increasingly leveraging AI to bypass human and technical defenses.
Claims professionals should anticipate an influx of incidents involving impersonation, privacy violations, and AI-enabled vulnerabilities—especially as internal misuse and third-party risks grow.
Perhaps most urgent for adjusters is the evolution of ransomware tactics. Traditional encryption-based schemes are giving way to data suppression and hybrid extortion models that target not only direct victims but also subsidiaries, vendors, and customers. These attacks cause ripple effects across operational and reputational domains, making recovery far more complex. This shift demands a revised understanding of claim severity and policy adequacy, especially as insurers face growing pressure to define coverage boundaries in the AI era. CONTINUES