AI, cyber, and climate risks set the insurance agenda for 2026
GlobalData's latest outlook is clear: artificial intelligence, cyber risk, and climate-driven losses will dominate carrier priorities this year. The carriers that act early create an edge on performance, product quality, and service. As Ben Carey-Evans put it, "Insurers that establish themselves as leaders in these themes will see improved performance, better products, and enhanced customer service. AI is undoubtedly the leading technology trend in the insurance industry at present… Its impact can be felt throughout the value chain."
AI moves from pilots to production
Deal activity tells the story. In 2025, M&A deals involving AI in insurance jumped 328% in value, with volumes up 125%. Munich Re's acquisition of Next Insurance in July 2025 signals demand for tech-first capabilities that compress expense ratios and speed up decisions.
The next leg is agentic AI-systems that react to live data and make human-like decisions with guardrails. Expect AI to touch pricing, triage, FNOL, fraud detection, and servicing flows end to end.
What AI leadership looks like in 2026
- Underwriting: Use agentic AI to triage submissions, pre-fill data, and route to straight-through or specialist review. Keep humans on high-severity and ambiguous cases.
- Claims: Automate intake, document extraction, and coverage checks. Deploy audit layers for fairness, leakage control, and explainability.
- Pricing: Blend live external data with traditional ratemaking. Monitor model drift and recalibrate on a defined cadence.
- Distribution: Stand up digital agents for quotes, endorsements, and renewal saves. Measure CSAT, NPS, and loss ratio impact, not just handle time.
- Governance: Formalize AI policies, testing, and monitoring. Anchor to frameworks such as the NIST AI Risk Management Framework.
- People: Train actuarial, underwriting, and claims teams on applied AI tools and workflows. Consider focused upskilling via Complete AI Training.
Cyber insurance keeps growing, but risk quality is the hinge
Global cyber premiums are forecast at $22.2bn in 2025, climbing to $35.4bn by 2030. Growth is real, but so is systemic exposure. Concentration around cloud providers, MSPs, and widely used software stacks can swing portfolio results fast.
- Controls-first underwriting: Require MFA, EDR, immutable backups, tested IR plans, and monitored patching. Make control gaps explicit in pricing and terms.
- Aggregation insights: Map vendor dependencies and run scenario tests for cloud outages, widespread vulnerabilities, and data extortion campaigns.
- Product and service: Pair coverage with pre-breach hardening and quick-response panels. Keep panel performance data transparent.
- Regulatory alignment: Track standards and disclosures; resources like the NAIC's cybersecurity materials help keep programs current.
Climate and NatCat: frequency up, insurability under strain
Weather volatility is stressing pricing, capacity, and access. As Carey-Evans warned, "Natural fire and hazard insurance is a major insurance product globally, with premiums and claims seeing sharp annual increases… The frequency of severe weather events is a huge threat to the industry and large areas of the world are becoming uninsurable, which is a major problem for consumers."
- Models and data: Adjust for non-stationarity and secondary perils. Use higher-resolution data and frequent view-of-risk updates.
- Product and pricing: Expand parametric options, mitigation credits, and deductible flexibility. Be explicit about coverage changes and triggers.
- Capacity strategy: Revisit cat aggregates and reinstatement structures. Blend traditional reinsurance with ILS where it adds stability.
- Market health: Engage regulators on rate adequacy and mitigation incentives. Support community resilience to keep markets insurable.
Actions to take this quarter
- Appoint executive sponsors for AI, cyber, and climate; set quarterly OKRs with loss ratio and expense targets tied to each theme.
- Approve an AI governance policy and testing playbook; integrate model monitoring into risk committees.
- Stand up a vendor and M&A pipeline for AI capabilities in claims, underwriting, and fraud; run two pilots with clear ROI gates.
- Refresh cyber underwriting questionnaires around core controls; add scenario-based pricing levers for vendor concentration.
- Run a climate stress test across top geographies; align reinsurance, aggregates, and pricing with findings before renewal season.
- Launch a parametric micro-pilot in one cat-exposed line to validate demand, data, and settlement speed.
- Publish a plain-language customer update on coverage changes, mitigation credits, and available support.
The signal is loud: AI adoption, cyber discipline, and climate resilience will separate carriers in 2026. Move first, measure relentlessly, and keep customers front and center.
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