Growth optimism drives insurance M&A and AI investment – KPMG

Insurance chief executives entered 2026 with rising confidence in growth prospects, underpinned by aggressive M&A plans, scaled investment in artificial intelligence and a more strategic approach to sustainability.

That was according to KPMG’s 2025 Insurance CEO Outlook, published in January 2026, which found that 82% of bosses were confident in their company’s growth over the next three years, up from 74% a year earlier.

A further 78% said they were confident in industry growth, despite continued pressure from inflation, regulatory change and rising claims costs.

KPMG said this optimism was underpinned by M&A deals. Half of insurance chief executives expected to pursue high-impact deals over the next three years, driven by the need to build scale, manage regulatory costs linked to cyber and ESG requirements and expand into new markets and specialty lines.

AI, meanwhile, has moved from experimentation to expectations of tangible returns.

The report found that 67% of bosses anticipated seeing a return on AI investment within one to three years, compared with 21% in 2024. Nearly three-quarters said AI was now a top investment priority, with many insurers deploying it across underwriting, claims processing, fraud detection and customer service.

Some 77% of chief executives said having an AI-ready workforce was critical to growth, while 54% planned to hire new AI and technology talent.

Transformation

The report surveyed 110 global insurance bosses, including UK leaders across the general insurance market.

Dr Frank Pfaffenzeller, global head of insurance at KPMG International, said insurers were increasingly using disruption as a catalyst for transformation.

He said: “Chief executives are no longer just talking about technology.

”They are actively scaling it to make every part of their business – from underwriting to claims – smarter and more efficient.”