A landmark report by McKinsey & Company, released in February 2026, suggests that the integration of Generative Artificial Intelligence (GenAI) is poised to revolutionise the global insurance landscape. The consultancy estimates that the technology could unlock an additional $50 billion to $70 billion in industry revenue, driven primarily by gains in marketing, customer operations, and software engineering.
The report highlights a pivotal shift: AI is not merely a peripheral tool but a core driver of private equity interest. Despite a softening in overall deal flow throughout 2025, the insurance sector remained a bastion of activity, with investors doubling down on assets that leverage high-tech efficiencies.
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The Divergence of Transatlantic Investment
The study reveals a stark contrast between the American and European markets. In the United States, private equity investment in insurance surged at a compound annual growth rate (CAGR) of 26% between 2020 and 2025. During the first half of 2025 alone, US deal volume hit a staggering $6.3 billion across 164 transactions.
Conversely, Europe told a different story. Invested capital on the continent declined at an average annual rate of approximately 18% from 2020 through the first half of 2025. This divergence underscores the aggressive pace at which US-based firms are adopting AI-driven models to consolidate market share.
Key Market Trends and Growth Segments (2020–2025)
The following table illustrates the performance of various insurance sub-sectors as they navigate the transition to an AI-enhanced environment:
| Sector / Metric | Key Performance Indicator | Market Observation |
| Broker Transactions | 70% of total deal count | Volumes fell 20% YoY in 2025 as the market matured. |
| MGAs (US Market) | $97bn in premiums (2024) | Grown from $47bn in 2020; a CAGR of roughly 14%. |
| TPAs | 15% average annual growth | Consistent deal growth over the past five years. |
| Software & Data | Stable investment | Supported by resilient, recurring revenue streams. |
Radical Efficiency Gains through Automation
One of the most compelling findings in the McKinsey report involves the dramatic reduction in operational timelines. Historically, the process of underwriting and providing quotes was a laborious task, often measured in weeks. With the implementation of GenAI, these windows are shrinking at an unprecedented rate.
The report notes that tasks previously taking several weeks are now being completed in days. In more advanced digital environments, processes that once required two to three days are now being finalised within one to two hours.
Reshaping, Not Replacing
McKinsey maintains that while the disruption is significant, AI is more likely to reshape existing insurance models rather than replace them entirely. The “winners” in this new era will be determined by how effectively firms can scale these technologies across their entire value chain.
As the industry moves toward 2027, the focus for insurers will shift from experimental AI pilots to full-scale integration, ensuring that the projected $70 billion in potential revenue becomes a tangible reality.