5 ways insurers will prioritize AI and customer experience in 2026

Insurers will prioritize customer experience in the coming year as declining customer satisfaction reveals the need to focus on retaining clients.

That was among Forrester’s predictions for the insurance industry for 2026.

Meanwhile, the increased use of artificial intelligence to boost operational efficiency will result in a significant shift for the insurance industry. In addition, cyber insurance will expand rapidly to combat new threats brought on by AI. Insurers will re-enter high-risk property markets, thanks to new underwriting techniques. And micro-insurance providers will find new opportunities in the growing gig economy.

What's ahead in 2026?

Here are Forrester’s five predictions for 2026.

1. Property/casualty insurers will boost their investment in customer experience to increase customer engagement. Forrester’s Customer Experience Index scores for auto and home insurers in the U.S. fell in 2025. Declining customer satisfaction was fueled by double-digit rate increases. Growing mistrust and frustration also led to challenges with customer retention.

Carriers identify customer experience as a key driver of financial performance and a way to differentiate themselves from competitors.

2. Cyber insurance will grow as new AI threats and data needs emerge. Forrester said cyber insurers should move beyond providing financial protection and become proactive partners in cybersecurity by providing cyber defense services, risk mitigation tools, and innovative ways to underwrite new risks posed by AI.
3. Expense ratios at the top 50 insurers will decline due to AI and automation. Insurance growth is slowing globally after a strong 2024, Forrester said. Carriers are doubling down on automation with at the center of this shift, streamlining claims and back-office processes.

Forrester recommended carriers craft an AI strategy that targets cost efficiency, prepare data for AI and automation, and embed AI into core operations to drop expense ratio.

4. An insurer will re-enter the California or Florida property insurance market in a novel way. The rising frequency and severity of natural disasters, coupled with social inflation have discouraged carriers from operating in the California and Florida property insurance markets. But Forrester predicts that techniques such as using IoT devices and smart home data, along with incentivizing risk mitigation and home hardening, will allow insurers to create personalized protection products for these high-risk markets.
5. Micro insurance will expand by 5% as the gig and freelance economy expands. Forrester said the gig economy is expected to surpass $600 billion in 2025 and continue growing. As more professionals rely on project-based income without traditional employer benefits, the need for affordable, flexible protection is increasing and creating strong demand for alternative insurance solutions. To serve gig workers, insurers must gig workers on coverage value, simplify onboarding and use digital channels to deliver modular, low-cost protection that fits flexible work patterns.

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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 [email protected].