This article is by Dr Naeema Pasha, Visiting Fellow, Henley Business School
Now more than ever, the insurance industry needs strong and strategic leadership. The combination of persistent economic and global uncertainty, an ageing workforce, global talent shortage, and balancing people centricity with profit has created a perfect storm. The challenge facing the sector is clear. Unless it innovates and embraces AI, it risks stagnating progress and alienating talent.
But for many senior leaders, the rapid rise of AI and the advent of Industry 5.0, where humans and machines collaborate, has been a double-edged sword. There is no denying the benefits that AI tools can bring for efficiency, agility and productivity, but the consequences of getting it wrong can be far reaching and even impact the future integrity and growth of the industry.
According to the 2026 Allianz Risk Barometer, concerns around AI have seen the biggest jump among global businesses in the past 12 months – moving from number ten to number two on the list – due to the potential operational, legal and reputational risks it presents. This is despite the UK Government setting out its Financial Services Growth and Competitiveness Strategy in 2025 with a focus on making the sector ‘the most technologically advanced in the world’.
So what’s holding the sector back when it comes to moving forward with AI?
Reality reset
The advent of Industry 5.0 has not only altered the status quo for businesses but profoundly changed roles and workforce expectations.
Young people are growing up with AI but it is also the reason why many entry-level roles are disappearing across all business sectors, with automated tools replacing human workers. In contrast, the number of specialised, senior roles in the insurance industry has increased in recent years. This is creating a skills gap and lack of enticement for the next generation to enter the profession. For an industry underpinned by big data and risk modelling, AI also has the potential to transform analysis and decision-making but only if used ethically and responsibly.
The extent and impact of AI implementation is a fine balancing act but one that leaders need to master to retain and attract workers in a sector where human judgement, critical thinking and risk management are crucial.
Progress roadblocks
To lead with intent and inspire the next generation, we need to understand the potential areas of conflict within the industry. These can often be broken down into three interdependent challenges: reputation, diversity and innovation inertia.
The insurance sector is built on trust and relationships. Underpinning this is reputation which often takes years to build but only seconds to break. Taking the wrong route with AI could repel critical and creative thinkers rather than retain talent. If AI replaces low value, entry-level work, how are early careers built and critical thinking skills acquired?
The impact of AI on diversity is also a common barrier as it has the potential to either enhance or restrict the talent pipeline. When it comes to innovation, there is a perception that the industry is slow to move, which is not helped by its reliance on legacy systems and high levels of inertia. But to make the sector attractive and the industry of choice for new and forward-thinking talent, this image needs to change.
Embracing the agility and opportunities enabled through AI and innovative technologies should be seen as complementary not conflicting. If used in the right way these tools will help to attract and retain talent, rather than push it out the door.
The role played by AI in overcoming key industry challenges is a view supported by both brokers and insurers. As a strategic broker partner to Allianz, Brown & Brown Insurance Brokers’ Richard Jennings – Regional Managing Director North-East, Yorkshire & Agriculture – comments: “AI won’t damage trust in insurance but leaders not embracing the benefits it can bring about, will. The sooner we as insurance leaders walk towards the exciting developments that AI can bring about, the quicker we can provide a more rounded and competent offering to our clients. It’s about jumping in the ring rather than watching from the outside.”
Strategies for human-centric innovation
The appetite among workers is there to support AI with the right leadership. Our own research found that a quarter (25%) of workers in the sector currently use AI in their work and are keen to use it more. This was well above average for all the sectors surveyed (16%).
But how can leaders create the right conditions for success? The following five key strategies will ensure that the industry can embrace innovation and continue to thrive but not at the expense of people.
- Create agility
Trial new projects but stay close to organisational values when scaling AI. Build prototype projects that have diverse, cross-functional teams to rapidly trial AI programmes, ensuring responsiveness to business goals whilst minimising bias through varied perspectives.
- Build resilience
Building resilience and future-proofing workforce capability is critical for the success of long-term commercial sustainability. This means upskilling teams across all groups, from AI through to DEI.
- Bridge the generational gap
Utilising reverse mentoring is a good way to start breaking stereotypes and blend digital fluency with institutional wisdom. This will foster an inclusive culture and teams that work with sound business judgement.
- Clear communication
When it comes to AI adoption, a key barrier to wider scaling is lack of engagement and enthusiasm. To address this, any adoption strategies need to be clearly linked to business strategy and career progression. Transparent messaging will engage every community and build unified momentum.
- Focus on psychological safety
By creating and maintaining psychological safety, staff can become empowered to experiment with tools and challenge AI outputs without fear. This will ensure innovation remains ethical, inclusive, and aligned with corporate values.
The opportunities and impetus for the industry is summed up by Richard: “We know that working principles and leadership models have changed significantly over the past 10-20 years. Future industry leaders should learn what they can from current leaders, but also not be scared of carving their own path and identity as strong leaders within insurance. People working in our industry are changing, the tech is evolving. The way we lead our businesses needs to change as well.”
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