2026 Insurance Industry Outlook: Growth and Challenges Ahead
As of 2026, the insurance sector remains stable but faces potential challenges. This was outlined in KPMG’s 2026 outlook for the insurance industry, presented by Sean Vicente, the U.S. insurance sector leader at KPMG, during a recent webinar. The report highlights critical areas such as AI-driven prior authorization delays and regulatory compliance requirements.
Growth and Premium Increases
The insurance industry has experienced growth in various segments. In 2025, both life insurance and property/casualty (P/C) insurance saw a rise in premiums. Notably, personal lines in P/C recorded a 6.9% increase in direct premiums from Q2 2024 to Q2 2025, while commercial lines saw a 5.7% increase. Life insurance direct written premiums rose by 4.6% from Q3 2024 to Q3 2025.
Industry Optimism and Workforce Dynamics
According to KPMG’s latest CEO survey, insurance executives maintain a positive outlook for 2026. Approximately two-thirds of surveyed CEOs expressed confidence in their companies' growth prospects. Additionally, 57% were optimistic about the overall industry and national growth in the upcoming year.
The workforce landscape is evolving, characterized by what Kelly DiCuffa of KPMG describes as "the great compression." The sector sees fewer new entrants, resulting in a top-heavy structure, with innovation increasingly emerging from a grassroots level.
Technological Integration and Cybersecurity
Advancing digitization and connectivity has been highlighted as a primary focus by 24% of insurance CEOs. Other priorities include mitigating inflation impacts (15%), enhancing customer experiences (13%), integrating generative AI (10%), and recruiting top talent (8%).
Cybersecurity is a significant concern, with 83% of insurance CEOs identifying cybercrime as a major threat. Other challenges include preparing the workforce for AI (77%), competition for AI expertise (75%), and effectively incorporating AI into business operations (73%).
AI and Workforce Concerns
Concerns about workforce dynamics persist, as over 30% of CEOs worry about the retirement of experienced employees and the shortage of skilled replacements. Additionally, generational gaps in AI skills (30%) and reliance on AI technology over employee skill development (18%) are significant issues.
AI is seen as a potential boon for efficiency and growth, noted by 44% of CEOs. However, ethical concerns (55%), data preparedness (51%), and the technical skills required for integration (44%) present challenges. Security and compliance issues, alongside employee adaptation to AI, remain areas of concern for 29% of CEOs.
Building a future-ready workforce that emphasizes AI skill development is crucial, with 77% of leaders viewing this as a critical growth constraint. This insight reflects the state of the insurance sector as it navigates a landscape of growth opportunities, tempered by technological and workforce challenges.