The latest analysis from Federato;
Federato, the AI-native platform that changes the way insurance work gets done, today released its 2026 State of P&C Insurance Technology report, based on a survey of 750 P&C insurance professionals across carriers, managing general agents (MGAs), and MGA aggregators. The report’s central finding: 91% of P&C leaders report real-time portfolio control, but only 27% of underwriters say the same, a 64-point gap. Insurers with fully integrated AI are 3.6 times more likely to actually have that control than those still layering AI on top of fragmented systems.
Leadership’s confidence doesn’t match reality
Executives believe their organizations have more visibility and consistency than employees experience day to day. 91% of leaders report good or full visibility into key performance indicators, but only 27% of underwriters say they have real-time portfolio control, a 64-point gap. Similarly, 93% of leaders believe underwriting guidelines are applied consistently across teams, while 88% of employees report deviations caused by missing data, disconnected tools, or workflow constraints.
When appetite guidance, portfolio context, and performance data live outside the workflow, execution drifts in ways that stay invisible to leadership until the cost has already compounded.
Integrated AI outperforms added AI
The insurers getting results from AI aren’t using more of it, they’re using AI that’s built into their workflows rather than layered on top of them. Organizations with fully integrated AI are 3.6 times more likely to report real-time portfolio control than those using AI in isolated pockets. Only 10% of insurers still in the early stages of AI adoption report fully embedded, real-time decision guidance, compared with 47% of those with broad integration.
The difference isn’t how much AI an organization has bought. It’s where that AI sits relative to the decisions that actually run the business.
A significant “coordination tax”
Those fragmented systems are costing P&C teams real time and money before AI ever enters the picture. The average P&C employee loses 5 hours a week to manual coordination work, an estimated $10,145 a year, and the tax grows with organizational scale: the bigger the company, the higher the cost. Average wasted underwriting effort rose from 26% in 2025 to 31% in 2026, severe appetite drift nearly doubled from 18% to 39%, and underwriters now navigate an average of 6.8 systems, up from 6.4 the year before.
More AI hasn’t reversed the trend. AI layered onto disconnected systems doesn’t remove friction, it adds another surface where friction accumulates.
The report also finds that the friction shows up in how employees compensate for it: 89% report using unsanctioned “shadow AI” tools outside their company’s approved systems at least occasionally, often to move faster through work that disconnected systems make slower.
“Every insurance leader I talk to has AI as a top two or three line-item at the board level. For most of them, that’s a first. And it’s starting to show: 29% of insurers in our survey say AI is already reducing manual effort. That’s real progress, but it also means most insurers still aren’t there yet. There will be clear winners and clear losers, and this report is about helping leaders see which side of that line they’re on.”
— Will Ross, CEO, Federato
Methodology
The 2026 State of P&C Insurance Technology report is based on a survey of 750 U.S.-based P&C insurance professionals conducted in 2026, at a 95% confidence level with a margin of error of ±3.4%. Respondents included C-suite executives, VPs and directors, managers, and individual contributors across underwriting, claims, billing, actuarial and pricing, portfolio management, IT, data and analytics, AI operations, business development, and distribution at carriers, MGAs, and MGA aggregators.
Real-time portfolio control refers to whether teams can see and act on portfolio performance as it happens, rather than relying on periodic or static reporting.
The full report is available for download here.
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