Will AI copilots replace legacy insurance systems by 2026?

Data shows executives trust generative AI at twice the rate of machine learning.

Insurers are advised to prepare for 2026 as artificial intelligence (AI) shifts from experimental use to becoming central to underwriting, claims and policy administration. 

The forecast comes as the industry continues to face pressures from climate risk, economic uncertainty and shifting regulations.

SAS experts say at least one Fortune 500 insurer is likely to start phasing out traditional policy administration systems in favour of AI copilots, as insurers invest more heavily in generative AI. 

The firm’s survey data shows executives trust generative AI at twice the rate of machine learning.

AI-driven claims automation is also expected to accelerate, with straightforward claims settled within minutes.

SAS warns, however, that insurers will need strong AI governance and security controls to prevent bias and cyber risks.

Actuarial modelling and decision-making will become more AI-powered, improving pricing and efficiency whilst helping insurers address the industry’s $1.8t protection gap. 

Underwriting models are also expected to shift from rule-based methods to systems that continuously learn from customer data, requiring strong transparency and explainability.

Climate change will continue to pressure underwriting performance, which could lead to higher premiums and further withdrawals from high-risk segments. SAS expects the global protection gap to widen as a result.

Insurers are also expected to adopt specialised AI tools rather than end-to-end platforms, particularly as fraudsters use AI to create fake identities and documents. 

More insurers will use AI agents to support investigations and improve efficiency.

Cyber insurance, now a $16.3b market, is projected to expand further.

Underwriting is expected to become more technical, with insurers favouring clients that demonstrate strong cybersecurity controls.