The growth of insurers is losing momentum. Price increases will no longer be sufficient to boost revenues. Instead, companies are increasingly focusing on AI, digitalization, and generating more new business.
The insurance industry’s growth, driven primarily by premium increases, is reaching its limits. For the coming years, the focus will shift back to so-called unit growth, meaning more new and existing customers as well as additional contracts. At the same time, insurers are investing heavily in artificial intelligence (AI) and digitalization, while hardly any further personnel growth is planned. These are key findings of the “Insurance 2026” study by the management consultancy Horváth.
According to the study, 57 percent of insurers’ revenue growth currently stems from price increases. Only 43 percent is attributable to new business and additional contracts. The picture is significantly different in other sectors: In the banking sector, 74 percent of growth is generated through new business, and in retail, it is 71 percent.
For the current year, the surveyed insurers expect revenue growth of 4.5 percent. This would put the industry behind the projected overall market, for which Horváth anticipates growth of 6.3 percent. “The insurance industry’s current growth model is reaching its limits. Future growth must come more from new customers, existing customer development, and additional business per customer – not from premium adjustments,” says Horváth partner Martin Müller.
To become more profitable, insurers are increasingly relying on digitalization and artificial intelligence. However, a significant difference is emerging between large and small companies. Insurers with a premium volume exceeding ten billion euros have already fully integrated AI into 53 percent of their operational processes. For smaller companies, this figure is only 24 percent. “The biggest hurdle to AI success is not the algorithms themselves, but rather a lack of skills, data quality, end-to-end processes, and governance,” explains Müller.
Accordingly, investments are focused on modernizing IT landscapes. 66 percent of insurers consider the renewal of their core systems and cloud migration to be a particularly important investment priority. A further 53 percent prioritize investments in AI, robotics, analytics, and data platforms.
No staff increase planned
Despite planned growth initiatives, insurers do not expect to increase their workforce in the short term. According to a study, no personnel growth is projected across the industry for 2026 and 2027. In the medium term, companies even anticipate a decline in the workforce of ten to twenty percent.
The main reason for this is productivity gains through AI and automation. At the same time, the demands placed on employees are shifting. Skills in technology, data analysis, and artificial intelligence are increasingly in demand. From the insurers’ perspective, the shortage of appropriately qualified specialists represents the biggest bottleneck in the implementation of AI.
“The industry is achieving staff reductions primarily not through dismissals, but through natural attrition and the decision not to fill vacancies. This trend is further facilitated by demographic developments,” said Müller.
