AI in Insurance
The New Insurance Era: AI-Driven Models, Markets & Momentum – Market Overview by Insurtech Israel
The global insurance industry is undergoing one of the most significant transformations in its history. Once known for legacy systems, complex onboarding processes, and slow product cycles, today’s insurers are accelerating toward a fully digital, data-driven future. At the centre of this evolution stands AI which is rapidly moving from experimentation to a core strategic capability for insurers worldwide.
From Automation to Intelligence: The New Foundations of Insurance
AI is no longer limited to chatbots or back-office automation. Insurers are now embedding AI into the entire insurance value chain — underwriting, pricing, distribution, claims, fraud detection, and customer service. The shift marks a move from reactive processes to predictive and preventive models.
Machine learning enables earlier risk detection; predictive analytics personalize coverage and pricing; and AI-driven decisioning improves accuracy and reduces manual workload. Generative AI adds another layer, streamlining document creation, summarizing correspondence, supporting advisors, and powering real-time customer interactions.
A key trend is the rise of agentic AI — autonomous systems capable of executing multi-step workflows independently. These systems can analyze large datasets, classify claims, identify anomalies, draft policy documentation, and support underwriting decisions with minimal human intervention. While human oversight remains essential, agentic AI significantly reduces operational friction and frees expert staff to focus on complex cases. CONTINUES
The state of AI in 2025: Agents, innovation, and transformation | McKinsey
Almost all survey respondents say their organizations are using AI, and many have begun to use AI agents. But most are still in the early stages of scaling AI and capturing enterprise-level value.
Most organizations are still in the experimentation or piloting phase: Nearly two-thirds of respondents say their organizations have not yet begun scaling AI across the enterprise.
High curiosity in AI agents:
- Sixty-two percent of survey respondents say their organizations are at least experimenting with AI agents.
- Positive leading indicators on impact of AI: Respondents report use-case-level cost and revenue benefits, and 64 percent say that AI is enabling their innovation.
However, just 39 percent report EBIT impact at the enterprise level.
- High performers use AI to drive growth, innovation, and cost: Eighty percent of respondents say their companies set efficiency as an objective of their AI initiatives, but the companies seeing the most value from AI often set growth or innovation as additional objectives.
- Redesigning workflows is a key success factor: Half of those AI high performers intend to use AI to transform their businesses, and most are redesigning workflows.
- Differing perspectives on employment impact: Respondents vary in their expectations of AI’s impact on the overall workforce size of their organizations in the coming year: 32 percent expect decreases, 43 percent no change, and 13 percent increases.
News
Global insured catastrophe losses set to hit $107 billion in 2025
(Reuters) — Annual global insured losses from natural catastrophes are expected to hit $107 billion in 2025, driven by the Los Angeles wildfires and severe convective storms in parts of the United States, a Swiss Re Institute study showed on Tuesday.
The U.S. stood as the most affected market in 2025, accounting for 83% of the global insured losses.
Insured losses from natural catastrophes topped $100 billion in 2025 for the sixth straight year, according to the report, shifting focus back on tighter underwriting, higher premiums and fresh scrutiny of risk models.
However, the figure was below Swiss Re’s earlier forecast of $150 billion in total insured losses. Global insured losses from natural catastrophes had reached $80 billion in the first half of 2025, according to a preliminary report issued earlier this year.
The Palisades Fire, which tore through Southern California in early 2025 and burned more than 23,000 acres, destroying homes and businesses and forcing thousands to flee, was the costliest wildfire event on record globally with insured losses of $40 billion, Swiss Re said.
Rising climate risks are prompting insurers to pull back from high‑risk areas across the U.S., widening coverage gaps and increasing financial pressure on vulnerable communities.
“2025 once again reminds us that elevated natural catastrophe losses are no longer outliers but the new baseline. It’s critical we double down on investing in resilience and adaptation so communities can be better prepared for the future,” said Monica Ningen, CEO of U.S. Property and Casualty at Swiss Re.
Global insured losses from severe convective storms rose to $50 billion in 2025, making it the third‑costliest year after 2023 and 2024, and extending a multi‑year upward trend.
However, hurricane losses were low, as none of the storms made landfall on the U.S. coast, for the first time in 10 years, despite an active season, helping keep insured losses below Swiss Re’s pre‑season expectations.
AM Best Revises Homeowners Insurance Market Outlook to Stable
The U.S. homeowners insurance segment is entering 2026 on firmer footing after several challenging years, according to AM Best’s “Market Segment Report” released this week.
AM Best revised its homeowners outlook to stable from negative, citing stronger catastrophe risk management, steadier reinsurance market conditions and gradually improving pricing adequacy. The market now joins the rest of the U.S. personal lines outlook as stable.
AM Best found that many carriers strengthened their risk-adjusted capitalization and liquidity positions through 2025. However, insurers in high-risk regions saw those cushions erode following severe events, such as the January 2025 California wildfires and widespread tornado activity during the first half of the year. The third quarter, however, was notably quiet—including an Atlantic hurricane season that left the U.S. mostly unscathed—which helped stabilize results heading into year-end.
Premium growth remained solid across the homeowners segment, although the pace slowed compared to 2024. Carriers continued to implement material rate increases to keep pace with inflation, rising construction costs and elevated loss activity. At the same time, inflation guard factors, which had climbed during the height of cost volatility, began to ease as broader inflationary pressures moderated.
US commercial insurance rates rise 3.8% in Q3 2025 - WTW
US commercial insurance pricing held at a 3.8% increase in Q3 2025, extending a cooling pattern that has played out since early in the year. WTW’s Commercial Lines Insurance Pricing Survey shows the same 3.8% rise in Q2 2025, down from 5.3% in Q1.
The survey tracks year-over-year premium changes by comparing policies written in a given quarter with equivalent coverage written a year earlier. On that basis, carriers reported an aggregate 3.8% increase for Q3 2025, a sharp step down from the 6.1% increase recorded in Q3 2024.
Pricing pressure continued to ease across most major commercial lines. Workers compensation, directors and officers liability, cyber, and commercial property all moved into rate declines.
According to Beinsure, excess and umbrella liability still posted the strongest increases, though the pace slowed again compared with earlier quarters.
Commercial auto remained an outlier. Rates stayed in double-digit territory, keeping the line among the fastest-rising in the market.
Loss severity, repair costs, and litigation exposure still weigh heavily there, and carriers show little sign of backing off. Account size mattered. Small and mid-market buyers saw lighter increases than in prior periods. Large accounts continued to face higher pricing, though the rate of increase dropped noticeably, pointing to a market that is settling rather than tightening further.
“US commercial insurance rates held steady in the third quarter of 2025, continuing the gradual easing we’ve seen over the past two quarters,” said Yi Jing, senior director of insurance consulting and technology at WTW.
Climate/Resilience/Sustainability
Climate risk management: Captives for long-term resilience - WTW
Captives can enable more efficient climate risk management and the longer-term risk financing view demanded by climate change and sustainability efforts.
We’re currently seeing more risk managers explore whether captives can play a bigger role in delivering more efficient climate risk management. As climate change amplifies the impact of multiple hazards – from more intense cyclones and snowfall to severe floods, heatwaves, droughts, and wildfires – climate-related risks consistently rank among the top concerns for risk managers, according to recent research by AXA.
As climate change amplifies the impact from multiple hazards,... risks associated with climate change consistently rank top among risk managers. We believe to address these long-term and potentially catastrophic risks, you may need to shift risk management mindsets. This is about moving away from the traditional, short-term focus on annual insurance renewals and toward longer-term horizons and risk financing strategies.
So, below, we explore the role of captives to support this move to longer-term approaches. Captives can both work to stabilize your financials in the face of ongoing climate change and accelerate continued sustainability efforts.
- Why adopt a longer-term view of climate risk management?
- Why develop a long-term ‘climate hedging’ strategy to mitigate climate-related risks?
- How can you quantify climate risk to better manage climate-related exposures with captives?
- How can a captive support long-term corporate goals on climate and sustainability?
- How can you protect your captive from being eroded by large losses from climate risks?
Insurers help policyholders mitigate risk as catastrophe losses rise
Key Points:
- Global insured losses from natural catastrophes are estimated to reach $107 billion in 2025, topping $100 billion for the sixth consecutive year, according to Swiss Re Institute.
- Wildfires and severe storms are the main driver of losses, accounting for 83% of the total insured losses.
- FM, a mutual insurer for commercial, industrial properties, has a special research campus in Rhode Island where teams of engineers test and certify materials and systems designed to withstand all kinds of perils.
- Insurers are helping policyholders mitigate their risk.
Catastrophe losses keep rising. Here’s how insurers are trying to mitigate risk
Climate catastrophes like wildfires and severe storms have become more frequent and damaging in the U.S., accounting for 83% of the estimated global insured losses of $107 billion in 2025, according to a new report from Swiss Re Institute.
This is the sixth consecutive year that global insured losses have surpassed $100 billion.
The Los Angeles wildfires in January accounted for insured losses of $40 billion alone, making them the costliest-ever wildfires globally, according to Swiss Re.
The insurance research firm said the soaring costs are due in part to rising real estate values as well as homeowners building in areas where wildland and urban areas blend, which is especially hazardous.
“Amid annual volatility, insured losses keep rising. That’s why strengthening prevention, protection and preparedness is essential to protect lives and property,” said Swiss Re Group Chief Economist Jerome Jean Haegeli in a news release.
Commentary/Opinion
Insurance Modernization Is Stalling | Insurance Thought Leadership
Carriers are confronting widening gaps between ambitious digital strategies and operational execution.
The insurance industry has spent years talking about modernization. Strategies drafted, budgets allocated, and pilot programs launched. But after early progress, momentum is slowing—and for many carriers, stalling altogether. The result is an industry caught between ambition and execution, where the cost of standing still grows with each passing quarter.
Recent data from West Monroe's survey of 300 insurance executives reveals a distinct pattern: while nearly every carrier has modernization plans in motion, few are making meaningful progress. 20% have defined strategies but haven't advanced execution. Another 12% remain in early planning stages. The most jarring: two-thirds of insurers expect it will take another three to seven years just to move core systems to the cloud, with 14% having no timeline at all.
This goes beyond technology. It's a business risk that's compounding with each passing quarter.
Peter McMurtrie is a partner of the insurance practice for West Monroe, a global business and technology consulting firm. He joined West Monroe from Nationwide Insurance, where he was president of Property & Casualty Commercial Insurance.
2026 Outlook/Predictions
Nat cat risks in 2026 – uncertainty amidst escalating loss trends
As insurers and reinsurers look towards 2026, Dr Melanie Fischer, natural hazards and GIS/data analyst at HDI Global, expects natural catastrophe loss trends to follow the pattern seen in recent years.
In conversation with Insurance Business, Fischer said natural hazard events are “complex natural phenomena which are governed by a multitude of influencing factors," meaning that "nat cat losses in general are quite volatile.”
“Hence, it is likely that in 2026 we will see a continuation of the Nat cat loss trends that we have seen in the past years,” she said.
Fischer noted that HDI Global expects that overall global economic losses from natural catastrophe events will again be above average, that socio-economic factors will remain the main drivers of insured natural catastrophe losses, and that secondary perils will increasingly shape risk profiles.
Sedgwick forecasts 2026 in new global risk study
Sedgwick, the world's leading risk and claims administration partner, has published its 2026 forecasting report. The report identifies key trends across sectors supported by insights from the company's industry leaders and Fortune 500 executives to spotlight the challenges and opportunities that will define the future of risk, claims, and workplace resilience.
In preparing the report, Sedgwick conducted research, sourced trends from company experts, and surveyed executives across Fortune 500 companies in partnership with an external research provider. The data and content focus on ensuring organizations are aware of new risks, prepared to adapt to existing and emerging challenges across industries, and navigate evolving trends while ensuring success in 2026.
"Navigating risk in 2026 is about planning for what you don't know is coming, not just what keeps you up at night right now," said Mike Arbour, CEO, Sedgwick. "This report should serve as a guide for companies across industries. Preparation, resilience, and long-term success is contingent upon having a full spectrum understanding of the present and future risk."
2026: The Year of the AI Luddite | beazley
Geopolitical tension and economic uncertainty are reshaping the risk landscape, and data centres sit at the heart of both global tension and opportunity.
Geopolitical tension and economic uncertainty are reshaping the risk landscape, and data centres sit at the heart of both global tension and opportunity. As the backbone of the AI ecosystem, they symbolise progress but also provoke anxiety over building location, societal impact, and the future of jobs - issues that have already fuelled opposition throughout 2025.
So far we’ve largely only seen this dialogue play out in the digital space, but will 2026 be the year it spills into the physical world?
Data centres, already critical infrastructure and flashpoints in a word of rising volatility, are increasingly prime targets for protest and disruption. Governments and businesses must prepare for incidents that threaten data centres and strengthen resilience to keep the essential systems they support running.
This is where Strike, Riots, and Civil Commotion (SRCC), political violence and terrorism, and cyber solutions play a vital role. As AI resistance shifts from rhetoric to reality, insurance must evolve from a simple safety net into a strategic enabler, helping organisations protect assets, keep operations running, and seize opportunities amid uncertainty
Tim Turner, Group Head of MAP Risks
Data Privacy
APCIA supports DRIVER Act to protect vehicle data ownership and privacy
The bill will ensure vehicle owners will have clear rights to access and control of data generated by their vehicles.
The American Property Casualty Insurance Association (APCIA) has expressed strong support for the Data Rights for Information and Vehicle Electronics in Real-Time (DRIVER) Act, introduced by Rep. Diana Harshbarger (R-TN).
The legislation is designed to ensure that vehicle owners have clear rights to access and control the data generated by their vehicles, from telematics and engine diagnostics to usage-based and safety information.
Under the DRIVER Act, automakers would be required to provide consumers with unimpeded access to their vehicle data and maintain transparent policies around collection, storage, and sharing. The bill aims to prevent unauthorized use of vehicle data, including potential misuse by third parties or foreign entities, while promoting fair competition among insurers, technology providers, and automotive companies.
Sam Whitfield, APCIA’s senior vice president of federal government relations and political engagement, said the DRIVER Act strengthens privacy protections, modernizes data ownership standards, and safeguards consumers’ interests. He emphasized that the legislation is critical for insurers, as access to accurate vehicle data under clear ownership rules supports risk assessment, underwriting, and claims processing while maintaining compliance with privacy and cybersecurity standards. Whitfield called on Congress to advance the bill swiftly, noting its importance in balancing innovation with consumer protection.