Insurance industry is healthy but uncertain in 2026

The insurance industry in 2026 is healthy but not without uncertainty.

That was the word from Sean Vicente, U.S. sector leader, insurance, with KPMG, who presented the organization’s 2026 insurance industry outlook at a recent webinar.

“We believe 2026 will be an interesting year and an important confluence for our industry. Few industries have more to think about as the year begins,” he said.

Life and property/casualty insurance showed premium growth in 2025, he noted, with P/C personal lines direct premium increasing 6.9% between second-quarter 2024 and the same quarter in 2025. Commercial lines direct premium grew 5.7% between Q2 2024 and Q2 2025 while life insurance direct written premium increased 4.6% between third-quarter 2024 and the same quarter in 2025.

Insurance industry CEOs see 2026 as a positive year, according to KPMG’s most recent CEO survey. Nearly two-thirds of those surveyed said they are confident about their company’s growth prospects in the coming year while 57% said they are confident about the industry’s and the nation’s growth prospects in 2026.

‘The great compression’ hits the insurance industry workforce

Industry leaders said they expect more from their employees than ever before, a phenomenon that Kelly DiCuffa, KMPG managing director for human capital, called “the great compression.”

Fewer people are entering the insurance industry, she added, and described the industry as an “hourglass model.” The industry has a top-down management model while innovation is being driven by what she called “a bottom-up curiosity mindset structure.”

Digitization a top operational policy

Advancing digitization and connectivity across the business was named as the top operational policy by 24% of CEOs surveyed. That was followed by inflation-proofing capital and input costs (15%), improving the customer experience (13%), understanding and implementing generative AI across the business (10%), and attracting and retaining top talent (8%).

Cybercrime and cyber insecurity was cited by 83% of insurance CEOs as the top trend negatively impacting their organization’s prosperity. Other trends listed were AI workforce readiness (77%), competition for AI talent (75%), successful integration of AI into business practices (73%) and the cost of technology infrastructure (65%).

Labor market factors also are a concern of insurance CEOs. More than 30% of CEOs surveyed said they are concerned about the number of employees retiring combined with a lack of skilled workers to replace them. Other labor-related factors of concern were growing generational gaps on key future skills including AI (30%), increasing employee dependence on AI-driven automation at the expense of upskilling (18%), and widening expectation gap between older and younger employees (14%).

AI is an opportunity and a challenge

The impact of agentic AI is on the minds of insurance CEOs, with 44% saying it will drive major improvements in efficiency or growth in their organizations.

But CEOs cite several challenges in implementing AI.

More than half (55%) said they are concerned about AI’s ethical challenges, while 51% named data readiness as a challenge. The technical skills required to implement AI were cited as a challenge by 44% of CEOs. About one-third said security and compliance are challenges, while 29% were concerned about employee reluctance or inability to adapt.

KPMG asked insurance CEOs how to build a future-ready workforce, and 77% of leaders surveyed said the top constraint on their company’s growth is AI upskilling.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.