Insurance CEOs Bullish on 2026 Growth Prospects Despite Cyber Risks, AI Challenges, and ESG Pressures – KPMG 2025 Outlook
Insurance industry leaders are entering 2026 with renewed optimism, showing heightened confidence in both company and sector-wide expansion. However, they face significant hurdles including escalating cyber threats, workforce upskilling needs, and complex ESG compliance, according to the latest KPMG 2025 Insurance CEO Outlook.
Drawing from a dedicated subset of KPMG’s global survey of 1,350 CEOs (conducted August–September 2025), the report captures perspectives from 110 executives across life, property & casualty, health, reinsurance, and brokerage firms.
Surging Confidence and Strong M&A Momentum
A clear majority—82% of insurance CEOs—express strong confidence in their organization’s growth potential for the coming year, marking a notable rise from 74% in the previous edition. Meanwhile, 78% feel positive about overall industry prospects (up from 76%).
This bullish stance fuels an exceptional appetite for strategic mergers and acquisitions. 50% of respondents anticipate pursuing high-impact M&A deals within the next three years—the highest proportion across all sectors surveyed. Motivations include gaining scale, broadening product offerings, entering new markets, and rapidly acquiring advanced technology and data expertise to navigate regulatory and competitive demands.
AI Takes Center Stage: Investment Surge Amid Ethical Hurdles
Artificial intelligence has become a strategic imperative in the boardroom. 73% of insurance CEOs rank AI as a leading investment focus, with 67% planning to direct 10–20% of their budgets toward it.
Expectations for returns have accelerated dramatically—most anticipate meaningful ROI within 1–3 years, compared to longer timelines in prior years. Notably, 44% view agentic AI (autonomous, goal-oriented systems) as capable of delivering significant or even transformative operational improvements, particularly in underwriting, claims processing, customer service, and risk assessment.
Yet challenges persist: ethical concerns top the list of barriers to adoption. KPMG stresses the need for robust governance, including comprehensive model inventories, explainability mechanisms, and clear data usage policies to maintain stakeholder trust. As highlighted in the report, identifying potential AI-related risks to customers and employees is essential for sustainable deployment.
Cyber Threats Emerge as Primary Growth Obstacle
Cybercrime and digital insecurity stand out as the foremost barrier to expansion, with 83% of CEOs citing it as their top constraint. In response, 53% prioritize cybersecurity and digital resilience as their leading area for risk-mitigation spending.
The insurance sector remains highly exposed due to vast customer data holdings, making it a prime target for attacks. Rising cyber claims, pricing volatility, and evolving threat landscapes continue to complicate the fast-expanding cyber insurance market.
Workforce Transformation and AI Readiness
Talent gaps represent another major challenge: 77% identify AI workforce readiness and upskilling as a critical growth limiter, while 83% note AI’s profound influence on training programs and required skills.
Over half plan to recruit specialized AI and tech professionals, with hybrid work models expected to persist. The industry grapples with dual pressures—replacing retiring experts while building AI-native capabilities organization-wide.
ESG Integration: From Compliance to Core Strategy
Sustainability has evolved into a strategic driver for many insurers. 72% report embedding ESG principles deeply into corporate strategy and business models, with 50% actively developing products that support energy transition and climate resilience.
However, compliance and reporting remain the dominant ESG focus for 55%, with scope-3 emissions and supply-chain decarbonization posing substantial difficulties.
Key Operational Recommendations for Insurers
KPMG outlines actionable priorities to capitalize on opportunities:
- Accelerate digital transformation and ecosystem connectivity
- Pursue AI aggressively while enforcing strong ethical governance and human oversight
- Bolster cyber defenses against rising threats
- Leverage M&A to bridge capability gaps
- Redesign customer journeys blending automation with personalized empathy
- Apply AI to enhance sustainability modeling and scenario analysis
Despite persistent macroeconomic headwinds—such as inflation, claims cost pressures, geopolitical tensions, and regulatory evolution—insurance executives remain convinced the sector can achieve sustainable, profitable expansion. Success hinges on balancing bold technology adoption with talent investment, disciplined claims management, and trustworthy governance.
The KPMG 2025 Insurance CEO Outlook underscores a forward-looking industry poised to harness AI and consolidation for resilience and value creation, while vigilantly addressing cyber, skills, and sustainability imperatives.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.