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.

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.

– Franklin Manchester, Principal Global Insurance Advisor

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 minimize 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 

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

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 optimizing 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 identifies, 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 generalized actuarial modeling for cyber to more targeted technical underwriting on a client-by-client basis. Insurers will increasingly favor those clients that exhibit and enforce proper security controls and governance while denying clients that do not.

– Norman Black, Insurance Industry Solutions Director, EMEA

Want to read more about what 2026 has in store?

SAS’ experts are serving up their takes across industries: banking, marketing, government and more. To see what else they’re saying, visit SAS’ technology and AI 2026 predictions hub. 

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