Generative AI in insurance could unlock $50b to $70b revenue: McKinsey

Gains would centre on marketing, customer operations and software engineering functions.

Private equity investors are continuing to back insurance assets as artificial intelligence (AI) reshapes parts of the industry, according to a February 2026 report by McKinsey & Company.

Although overall deal flow softened in 2025, insurance remained active. Broker transactions, which account for about 70% of total deal count, fell around 20% year on year as the market matured. 

Managing general agents (MGAs) made up roughly 5% of deal flow, whilst third-party administrators (TPAs) recorded average annual deal growth of about 15% over the past five years. 

Investment in insurance software and data providers also held up, supported by recurring revenues.

The United States led activity. US private equity investment in insurance grew 26% per year from 2020 to 2025. 

In the first half of 2025, US deal volume reached $6.3b across 164 deals. In contrast, invested capital in Europe declined at an average annual rate of about 18% between 2020 and the first half of 2025.

McKinsey estimates generative AI could unlock $50b to $70b in additional industry revenue, mainly in marketing and sales, customer operations, and software engineering.

MGAs have been one of the fastest-growing segments, with US premiums rising from $47b in 2020 to $97b in 2024, a compound annual growth rate of about 14%. 

AI is helping reduce underwriting and quoting times from weeks to days, and in some cases from two to three days to one to two hours, McKinsey said.

The report says AI is more likely to reshape existing insurance models than replace them, with returns depending on how effectively firms adopt and scale the technology.