Chief executives across the global insurance industry are accelerating investment in artificial intelligence (AI), signalling a decisive shift towards technology-led growth as firms navigate economic uncertainty, climate pressures, and an increasingly complex risk environment. While challenges persist, industry leaders remain notably confident about future prospects, underpinned by strong belief in digital transformation.
A recent global outlook by KPMG International reveals that 82% of insurance CEOs are confident in their organisations’ growth over the next three years, marking a clear rise from 74% in 2024. Confidence in the wider industry is similarly resilient, with 78% expressing optimism about long-term expansion and stability.
Table of Contents
AI Becomes a Strategic Imperative
Artificial intelligence has moved beyond experimental phases to become a central pillar of corporate strategy. Around 73% of CEOs now rank AI among their top investment priorities, reflecting its growing role in driving efficiency, innovation, and competitive advantage.
A substantial 67% of respondents indicate plans to dedicate between 10% and 20% of their overall budgets to AI, analytics, automation, and generative technologies. This allocation highlights the scale at which insurers are embedding advanced digital tools across core operations.
Encouragingly, expectations of financial return are strengthening. Approximately 67% of CEOs anticipate achieving returns on AI investments within one to three years—more than three times the 21% recorded in 2024. This sharp increase underscores rising confidence in AI’s ability to deliver measurable outcomes, from cost reduction to enhanced customer experience.
Industry Snapshot
| Indicator | 2025 | 2024 |
|---|---|---|
| CEO confidence in company growth | 82% | 74% |
| Confidence in insurance industry | 78% | — |
| AI as a top investment priority | 73% | — |
| Expected AI ROI within 1–3 years | 67% | 21% |
| Cybercrime seen as top threat | 83% | — |
| Workforce skills gap concern | 83% | — |
| Ethical concerns around AI | 56% | — |
| Data readiness challenges | 51% | — |
| Regulatory barriers to AI adoption | 77% | — |
Barriers to Effective AI Adoption
Despite strong momentum, insurers face a range of obstacles in scaling AI deployment. Workforce readiness remains the most significant challenge, with 83% of CEOs identifying skills shortages as a key constraint. The rapid pace of technological change has outstripped the availability of suitably trained professionals, making reskilling and talent development urgent priorities.
Ethical considerations are also prominent, with over half (56%) of respondents highlighting concerns around responsible AI use, including transparency, bias, and accountability. Meanwhile, 51% cite data readiness as a barrier, pointing to the need for robust data governance frameworks and high-quality datasets.
Regulation continues to present a complex landscape. Around 77% of CEOs warn that evolving regulatory requirements could delay or complicate AI implementation, particularly in highly regulated markets where compliance obligations are stringent.
Cybersecurity Takes Centre Stage
As insurers deepen their reliance on digital systems, cyber risk has emerged as the most significant threat to growth. An overwhelming 83% of CEOs identify cybercrime—including ransomware attacks, data breaches, and system disruptions—as their primary concern over the next three years.
This heightened awareness is driving increased investment in cybersecurity infrastructure, resilience planning, and advanced threat detection systems, as firms seek to safeguard both operations and customer trust.
Consolidation and Strategic Deals
Mergers and acquisitions (M&A) are expected to remain a defining feature of the sector’s evolution. Half of surveyed CEOs anticipate high-impact deals in the coming years, whilst a further 41% foresee moderate activity. These transactions are likely to focus on acquiring digital capabilities, expanding into new markets, and strengthening competitive positioning.
Sustainability at the Core of Strategy
Sustainability is becoming deeply embedded in insurers’ long-term strategies. Around 72% report that sustainability principles are now integrated into their core operations. In parallel, 81% are enhancing their environmental, social, and governance (ESG) disclosures, whilst 77% are advancing climate risk modelling to better understand and mitigate future exposures.
This shift reflects growing regulatory pressure, investor expectations, and the increasing financial impact of climate-related risks.
India Mirrors Global Momentum
In India, these global trends are clearly evident. The insurance market is experiencing strong premium growth, driven by rising demand for protection and retirement solutions. At the same time, rapid digital adoption is transforming distribution channels, underwriting processes, and claims management.
Indian insurers are placing particular emphasis on governance, regulatory compliance, and workforce reskilling as they expand their use of AI and digital technologies. The industry is also progressing from pilot initiatives to full-scale AI deployment, with applications spanning risk assessment, fraud detection, and customer service optimisation.
Outlook: Balancing Opportunity and Risk
While confidence across the insurance sector remains high, the road ahead will require careful balancing of opportunity and risk. The successful integration of AI, combined with effective management of cyber threats, regulatory demands, and talent shortages, will be critical.
Ultimately, insurers that invest strategically in technology, human capital, and partnerships are likely to emerge as leaders in an increasingly digital, data-driven, and competitive global marketplace.