Insurers invest up to 8% in AI but few indicate measurable financial impact

Global premiums are also forecast to grow 2.3% in real terms in 2026 and 2027. 

Aritifical intelligence (AI) continues to reshape insurance operations, as insurers are allocating 3% to 8% of IT budgets to development in 2025, yet fewer than 5% have disclosed measurable financial impact, according to Swiss Re's latest sigma report.

Swiss Re expects near-term adoption to focus on efficiency and underwriting improvements rather than labour displacement. A key challenge will be pricing risks with no historical precedent.

Swiss Re Institute also says the global insurance industry is entering a new phase shaped by higher inflation, industrial policy, demographic change and rapid advances in AI, but the sector remains profitable with steady premium growth expected through 2027.

In its latest sigma report, Swiss Re notes that re-industrialisation and government spending are lifting engineering, property and liability insurance demand, even as supply-chain shifts create more concentrated and correlated exposures. 

The rise of industrial policy – with government interventions tripling since 2012 – is also pushing up long-term inflation and bond yields, which affect insurers’ investment strategies.

Ageing populations are shifting protection needs. 

Swiss Re says demand is moving from traditional family protection toward retirement income, longevity cover and health insurance. 

This is altering insurers’ asset-liability management requirements and increasing the importance of long-term solvency planning.

Despite macroeconomic uncertainties, Swiss Re says the global insurance industry remains well capitalised, with solvency ratios above 200% and strong liquidity buffers. 

Global premiums are forecast to grow 2.3% in real terms in 2026 and 2027. 

Non-life premium growth is expected to ease to 1.7% before rebounding to 2.5% in 2027, with return on equity around 10.5% supported by higher investment yields of 4.3%. 

In life insurance, premiums are projected to grow 2.5% per year, with investment income improving as long-dated yields stay elevated. 

Total global life premiums are on track to reach $4.1t by 2027, representing 44% of worldwide premiums.