Insurance leaders worldwide are intensifying their investment in artificial intelligence (AI), signalling a profound shift towards technology-led transformation as the industry confronts economic headwinds, climate-related pressures, and an increasingly complex digital risk environment. Despite these challenges, executives remain notably confident, reflecting a growing conviction that innovation will underpin future resilience and growth.
According to the KPMG International 2025 Insurance CEO Outlook, 82% of insurance chief executives express confidence in their organisations’ growth prospects over the next three years, marking a clear rise from 74% recorded a year earlier. Confidence in the broader sector is also strong, with 78% of respondents indicating optimism, suggesting that the industry is well-positioned to navigate ongoing uncertainty.
The survey, drawing on responses from 110 CEOs across life, non-life, reinsurance, and composite insurers globally, underscores a decisive strategic pivot towards digital capability-building. Insurers operating across segments such as motor, property and casualty, health, and broking are increasingly prioritising investment in advanced technologies, workforce transformation, and strategic alliances to maintain a competitive edge.
Artificial intelligence has emerged as the central pillar of this transformation. Around 73% of executives identify AI—alongside analytics, automation, and generative technologies—as a top investment priority. Notably, 67% of respondents plan to allocate between 10% and 20% of their budgets to these areas, highlighting a significant financial commitment. Expectations of returns have also strengthened considerably, with 67% anticipating measurable outcomes within one to three years, a sharp increase from just 21% in 2024.
However, the transition towards AI-driven operations is not without its difficulties. Workforce readiness remains a critical concern, with 83% of CEOs citing skills shortages as a major impediment. As insurers move beyond pilot projects to enterprise-wide implementation, the need for large-scale reskilling and upskilling initiatives has become increasingly urgent.
Ethical considerations present an additional challenge, identified by 56% of respondents, reflecting heightened scrutiny around the responsible use of AI. Meanwhile, 51% point to issues related to data quality and accessibility, both of which are fundamental to effective AI deployment. Regulatory constraints further complicate the landscape, with 77% of executives warning that compliance requirements could slow the pace of adoption.
Cybersecurity has emerged as the most significant threat to future growth, with 83% of CEOs identifying cybercrime as a primary concern. As insurers expand their digital infrastructure and reliance on interconnected systems, their vulnerability to cyberattacks has increased, prompting greater investment in resilience, risk mitigation, and advanced security frameworks.
Mergers and acquisitions (M&A) are also expected to play a crucial role in shaping the sector’s trajectory. Half of the surveyed executives anticipate high-impact deals in the coming three years, while 41% foresee moderate activity. This trend reflects a broader push towards consolidation, enabling insurers to enhance scale, acquire technological capabilities, and expand into new markets.
Sustainability continues to rise in importance within corporate strategy. Approximately 72% of insurers report that sustainability is now embedded in their operations, while 81% are strengthening environmental, social and governance (ESG) reporting practices. Additionally, 77% are advancing climate risk modelling, underscoring the growing need to incorporate environmental considerations into underwriting and investment decisions.
In India, these global trends are particularly pronounced. The market is witnessing strong premium growth, driven by increasing demand for protection and retirement solutions. Rapid digital adoption is transforming distribution channels, underwriting processes, and claims management. Insurers are moving decisively from experimental AI initiatives to broader deployment, leveraging advanced technologies to enhance risk assessment, improve fraud detection, streamline operations, and deliver more personalised customer experiences.