Time to look ahead at the bigger insurance brands. What next in M&A, long term investments, net zero, compliance and growth strategies? Let’s get into it.
ASSETS ARE AN EVOLVING SECTOR
Large companies and HNW individuals may well change their asset portfolios next year. Matthew Vegari, Head of Research, CWAN offers these insights;
“There are allocation shifts emerging across the US, UK, and continental Europe as insurers adapt cyclically to changes in interest rates and monetary policy. In 2026, a structural story will continue unabated, however, that of alternative assets gaining prominence within insurer portfolios. Once the preserve of adventurous fund managers, alts now comprise almost a third of assets held by US insurers according to our recent research. Our proprietary database across 400+ insurers reveals that private credit remains the dominant entry point, with European firms favouring privately placed corporate bonds over the more diversified mix of private assets in the US.
The relevant question for next year is not whether alts are here to stay but how portfolios will adapt to their permanence. The challenge will be for firms to achieve an open, scalable technology infrastructure to handle the new complexities that come with alts. Investors are essentially expanding into opaque asset classes that legacy systems were never designed to support. In a market environment where longstanding correlations continue to be broken, allocators need a single, integrated view of their entire portfolios now more than ever.
For years, “alternative assets” have been loosely defined across financial markets. In 2026, the moniker may no longer serve its initial purpose. Insurers should address the technology gap as soon as possible or risk being left behind.”
WILL THE AI INVESTMENT BUBBLE BURST?
That’s a big question and the answer is yes from IE. If you look at blockchain, the Cloud, the dotcom retail bubble of 2000-02, you see a pattern at work. The exact moment however is impossible to predict. Insurers need to see value and returns on AI investment, whether it’s another company, or a patented product they’re buying.
Here are thoughts from Shaun Hurst, Principal Regulatory Advisor at Smarsh, the global communications data and intelligence firm;
“In 2026, financial services organisations will shift from rapid experimentation to demanding measurable return of investment (ROI), with pressure mounting, a Massachusetts Institute of Technology (MIT) study revealed 95% of enterprises currently see zero return on AI investments. Environmental concerns around AI’s energy consumption will also emerge as a governance consideration alongside traditional compliance and security factors.
“We expect to see further regulation around AI, with the EU AI Act’s main provisions coming into effect on 2 August 2026. Businesses developing or using high-risk AI systems will face new requirements around transparency, documentation, and human oversight. This will move many organisations from experimentation to compliance-led deployment, as governance and accountability become central to how AI is adopted.
“Despite falling AI Application Programming Interface (API) costs, financial services firms will find building AI-powered solutions, like communications surveillance tools in-house, remains prohibitively complex and expensive. The real costs lie in deployment complexity, ongoing governance and ensuring regulatory compliance. This will likely drive organisations toward specialist vendors rather than internal builds, as compliance and security risks become increasingly apparent.”
CONSOLIDATION MIGHT GATHER PACE
Mergers across the data and AI suppliers are likely next year, really every broker, MGA and insurer has similar goals; save time and money on admin and automated processing. But beyond that will we see bigger brands merging in Life, Commercial or Motor?
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Impact of Climate Change on Insurance
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“Climate change remains one of the most significant challenges shaping the insurance sector. In commercial lines, rising global temperatures and increasing natural catastrophes are forcing insurers to rethink how they model and mitigate risks.”
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“As the world continues to grapple with these changes, there is a growing emphasis on proactive and preventive insurance. This means using data to provide early warnings for events such as hurricanes, floods, and wildfires, helping clients reduce their exposure. Integrating real-time environmental data into underwriting and claims systems will become a strategic priority.”
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Impact of Regulation on Insurance
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“Decision transparency will be a key part of insurance operations in 2026, as regulators such as the FCA are expected to introduce new governance frameworks around AI, focusing on the reasoning behind decisions, accountability, and the mitigation of bias. Insurers will be required to regularly report on and demonstrate how AI-driven decisions are made, particularly in pricing, underwriting and claims, and will need to share sample data to demonstrate fairness and transparency in AI models.”
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“FCA will continue to refine its Consumer Duty framework as the foundation of UK financial regulation in 2026, shifting focus from implementation to evidence of good outcomes. FCA is doubling down on an outcomes-based approach, requiring firms to demonstrate fair value, clear communication, and robust customer support throughout the lifecycle of products and services.”
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