News
Six straight years above $100 billion - and the insurance environment is not getting simpler
Insured losses from natural catastrophes reached $107 billion in 2025, marking the sixth consecutive year above the $100 billion threshold, according to Swiss Re Institute - a 24% decline from the record $141 billion recorded in 2024, but achieved without a single hurricane making landfall in the United States. Willis has warned that the apparent respite masks a structurally higher risk floor and more complex loss patterns, with risk management frameworks struggling to keep pace.
That structural backdrop frames the findings of the eighth edition of Global Insurance Law Connect's Risk Radar report, drawing on contributions from 26 member firms across 28 jurisdictions. The report finds that compliance requirements, climate-related claims and technology risks are converging into a more demanding operating environment for insurers in 2026 - with pressure on multiple fronts simultaneously rather than sequentially.
Weather losses redefine the baseline
Global catastrophes in 2025 caused approximately $224 billion in total economic losses, with insured losses of around $107-108 billion according to market estimates from Swiss Re and Munich Re respectively. So-called secondary perils - including wildfires and severe convective storms - dominated the insured loss landscape, underscoring the view that these non-peak perils should no longer be classed as secondary at all.
Mid-single-digit billion US storm losses put June outbreak among industry's costliest periods in 2026: Gallagher Re - Reinsurance News
Gallagher Re has suggested that nearly daily outbreaks of severe convective storm (SCS) activity in the first two weeks of June, which affected several major metro areas from the Rockies to the Northeast in the United States, will have an estimated aggregated cost to the insurance industry in the mid-single-digit billions.
According to the firm’s new event commentary authored by Steve Bowen, Brian Kerschner, and Sara Sienkiewicz, the June 1-17 period featured dozens of confirmed tornado touchdowns, destructive large hail, damaging straight-line winds (including a confirmed derecho on June 10), alongside flash flooding.
Gallagher Re revealed that the major metro areas affected during the period included Chicago, Denver, Dallas-Fort Worth, Milwaukee, Washington DC, and New York City, among others.
The firm continued, “The estimated aggregated cost of the June 1-17 period to the insurance industry was estimated to reach at least into the mid-single-digit billions in the US.
“This two-week-plus stretch will be among the most expensive periods for the industry, regardless of natural peril, thus far in 2026.”
A New Era of Risk Resilience for P&C Insurance
Could insurers have a net loss of policyholders? It’s possible!
Currently, 1 in 7 homes is uninsured and 1 in 7 drivers is uninsured. Climate risks are shifting and increasing, exacerbating affordability and pushing policies out of reach for many individuals and families.
According to Aon’s 2026 Climate and Catastrophe Insight report, severe convective storms dethroned hurricanes as the costliest insured weather peril.[i] It’s not the big-name disasters keeping P&C insurers up at night anymore – it’s something far more frequent and harder to predict.
At the same time, continued legal system abuse, increased risk volatility, and claims costs are adding further pressure to P&C insurers financially, but also pressuring their customers. Insurers have raised rates to address the increased risk and their financials. Unfortunately, the consequence is an increasing financial strain on some insurance customers and the growing protection gap that it brings with it.
This is unsustainable for the insurance industry, unsustainable for banks and mortgage companies, and certainly unsustainable for insureds. MORE
AI in Insurance
How Insurers Should Use AI-Created Capacity
Alan Demers
No matter which side of the argument one takes over AI job creation or destruction, there is a looming, widespread AI image crisis. Phrases such as “AI job apocalypse” say it all. Growing negative sentiment about data centers has found its way into political campaigns, with concerted efforts to halt or divert construction. To the surprise of many, the mere raising of the AI topic drew jeers from young graduates at several recent commencement ceremonies. According to Pew Research Center, just 10 percent of Americans say they are more excited than concerned about AI, down from 37 percent when first asked in 2021.
Of late, however, the tenor of the AI job-destruction debate is softening into a discussion of capacity creation—in other words, using new capacity for people to do other work instead of merely cutting jobs.
Instead of mass layoffs, companies must contemplate what to do with new capacity by redirecting employees to focus on more meaningful tasks. Although “more meaningful” and “higher-value” work are loosely defined, the precept of shifting resources to work of higher importance is well suited to the P&C insurance industry, which runs on people and prides itself on doing business through people and relationships.
AI is splitting insurance into two workforces – and the dividing line runs through the claims depart
A landmark PwC study of more than a billion advertisements finds AI is not destroying insurance work - it is creating a stark divergence between the roles it elevates and the roles it quietly erodes
The insurance industry has spent three years asking whether artificial intelligence will take its jobs. PwC's 2026 Global AI Jobs Barometer, published yesterday and based on analysis of more than a billion job advertisements across 27 countries, suggests that is the wrong question. The more important one - and the one with real consequences for every person working in insurance - is which jobs AI will make more valuable, and which it will quietly hollow out.
The answer turns on a distinction PwC calls professionalisation versus democratisation. In professionalised roles, AI strips away routine tasks and leaves the more complex, expert work to people, making those roles harder, better paid and more in demand. In democratised roles, AI absorbs the expert tasks instead, leaving the less demanding work behind and gradually reducing the premium attached to those jobs. The report's data shows professionalised roles growing twice as fast in headcount and seeing 42% faster wage growth since 2021. Democratised roles are growing, but more slowly, and their wages are falling behind.
Insurance sits directly in the path of this divergence.
Insurance Agents Are Using AI Faster Than Their Firms Can Govern It
Despite surging investment in AI tools, relatively few independent agents use AI daily, and most operate without formal governance or training, according to Cake & Arrow.
Insurance organizations are pouring money into artificial intelligence, with AI software spending forecast to reach $297 billion by 2027, but a new report from experience design firm Cake & Arrow finds that investment is failing to reach the agents who need it most.
Only 8% of independent agents are using AI on a daily basis, according to Liberty Mutual data cited in the report. Based on in-depth interviews with 16 agents and brokers across 13 states, the report finds that AI adoption in the agent and broker channel is largely ungoverned, inconsistently implemented, and producing far less value than the technology is capable of delivering.
The picture that emerges is one of improvisation at scale. Most agents interviewed fell somewhere between “ungoverned” and “informal” on a spectrum of AI governance maturity, the report found. In practice, that meant agents were handed access to tools with little guidance, left to learn from peers, and in some cases uncertain whether they were even permitted to use the AI tools already on their desktops.
One participant, a sales manager at a captive agency, told researchers that more training around use cases and prompting “would go a long way.”
Insurers’ AI goals expose the cloud execution gap | NTT DATA
AI is raising the stakes for insurers, exposing the cloud, data and modernization challenges that stand between experimentation and enterprise-scale impact
AI makes it possible for insurance claims adjusters to instantly access every relevant policy detail. Fraud analysts can spot suspicious patterns in real time, and customers can receive personalized answers to complex questions about their cover in seconds rather than days.
To get these results, insurers are investing heavily in AI — only to discover that the biggest obstacle to success is not the technology itself but the foundation underneath it.
This is because AI models depend on something many insurers are still working to modernize: cloud infrastructure and data platforms. When these foundations aren’t in place, even the most ambitious AI initiatives can struggle to move beyond isolated use cases.
Research from our global report, Cloud-led innovation in the era of AI: The new rules for driving value with cloud, shows that cloud modernization is the number-one priority for insurers over the next two years. Nearly all insurance respondents (98%) say the rise of AI and agentic AI has increased the need for cloud investment, with 95% acknowledging that their current cloud investment levels put AI, cloud-native and modernization initiatives at risk.
Can they modernize fast enough to operationalize AI securely and efficiently at enterprise scale?
Announcements
Lemonade Brings Autonomous Car Insurance to Colorado
Lemonade (NYSE: LMND), the technology-driven insurance company, today announced that its Autonomous Car insurance is now available in Colorado.
Lemonade Autonomous Car is a first-of-its-kind product that gives Tesla owners 50% off every mile driven using Tesla's Full Self-Driving (Supervised) technology.
"Today, we're bringing Lemonade Autonomous Car to Tesla drivers in Colorado. This first-of-its-kind insurance product cuts Tesla's cost of ownership by slashing insurance prices in half for miles driven with FSD (Supervised)," said Shai Wininger, President and Co-Founder of Lemonade. "Tesla's safe FSD (Supervised) tech reduces the chances of getting into an accident. Our intelligent pricing models see this in the data and can pass real savings, with high precision, on to Tesla customers."
Colorado Tesla drivers can now get a quote in seconds through the Lemonade app or at tesla.lemonade.com/fsd, and receive further savings when bundled with Lemonade Renters, Pet, or Home insurance.
Commentary/Opinion
Interview: People not technology are insurance’s real legacy platform, says Sapiens CRO James Hannay
In an interview with Satarupa Bhowmik, Sapiens CRO James Hannay calls out the industry’s failure to move AI past boardroom talk into real deployment and signals a “widespread appetite for change”.
Insurtech has evolved from experimental tech to a vital industry lifeline. As companies race to modernise legacy systems, AI is the defining catalyst - driving efficiency, speed, and better customer experiences. Yet, the industry still battles persistent hurdles in adoption, cultural shifts, and execution.
Sapiens chief revenue officer James Hannay signals a "widespread appetite for change". He calls out the industry's failure to move AI past boardroom talk into real deployment. He also charts Sapiens' future: leveraging a new London headquarters to launch an AI-native platform fuelled by deep insurance expertise.
LI: Insurtech has evolved a lot in the last few years. Looking at the sector today, what do you find the most exciting and what concerns you?
James Hannay: The executives I have been talking to agree it's time to act on AI, but beyond frequent mentions of the technology in their board decks, very little of it is showing up in their business.
CEOs owe themselves and their stakeholders more. And better. Whether it's automating risk assessment and underwriting, speeding claims processing and fraud detection, or giving their customers greater transparency, technology is not the problem. The problem is people. People are the true legacy platform that needs to be transformed. INTERVIEW
Recommended Events
ITC Vegas | Horizon of Possibilities
ITC Vegas September 29, 2026 - October 1, 2026
The largest insurance innovation event in the world - Predict, Prepare, Progress
From the shore, the ocean can appear calm. Yet, under the surface, tectonic plates shift, pressure builds, and currents redirect—long before we detect movement. That’s insurance right now. Climate, technology, regulation, and human behavior are reshaping risk in real time. Change isn’t coming; it’s already here. The real question is how we move forward.
We set our sights on the horizon and turn insight into action.
‘Connected’ proudly sponsors ITC Vegas 2026
CIECA CONNEX 2026 Sep 29 – Oct 01, 2026
Matt Moore, Chief Insurance Operations Officer for the Insurance Institute for Highway Safety (IIHS) and the Highway Loss Data Institute (HLDI), to present at CIECA CONNEX 2026
"The Impact of the Changing Vehicle Fleet on Auto Safety and Insurance"