AI in Insurance Market Size, Share & Industry Analysis, By Application (Claims Processing, Customer Service, Underwriting, Fraud Detection and Others), By Deployment (Cloud and On Premise), By Enterprise Type (Large Enterprise and SMEs), By Technology (Machine Learning, Natural Language Processing (NLP), Computer Vision and Others), and Regional Forecast, 2026 – 2034

The global AI in Insurance market size was valued at USD 10.36 billion in 2025. The market is projected to grow from USD 13.45 billion in 2026 to USD 154.39 billion by 2034, exhibiting a CAGR of 35.7% during the forecast period.

Artificial intelligence (AI) application in insurance refers to the use of advanced algorithms, machine learning, and data-driven systems to automate, optimize, and enhance core insurance processes. It helps life insurers improve underwriting accuracy, streamline claims handling, detect fraud, and personalize products based on customer behavior. By analyzing large datasets quickly, AI supports faster decision-making and better risk assessment. Overall, it strengthens operational efficiency while improving customer experience across the insurance value chain.

The market is being driven by the growing need to automate claims processing. Insurers are under pressure to handle rising claim volumes, quickly and accurately, and AI helps reduce manual effort, minimize errors, and shorten settlement time. By using tools that can analyze documents, images, and customer data in real time, companies can improve efficiency and lower operational costs. This rising focus on faster and more reliable claims management is pushing insurers to adopt AI solutions at a rapid pace. 

Major companies in the market including Lemonade, Inc., Tractable, ZestyAI, FurtherAI, Inc., and Afinity are pursuing strategies such as building AI native platforms to automate underwriting, pricing, and claims while expanding into new product lines and geographies. 

MARKET DYNAMICS

Market Drivers

Growing Adoption of Generative AI Across Insurance Workflows to Drive the Market Growth

Growing use of generative AI across insurance workflows is becoming a major catalyst for AI in insurance market growth as it transforms how information is created, processed, and delivered. Generative models can draft policy documents, summarize claims files, and create customer friendly explanations in seconds, which sharply reduces the manual workload. GenAI automatically generates policy wording, proposals, endorsements, and internal reports. For instance,

• A life insurer uses GenAI to draft customised policy proposals based on a customer’s age, income, and risk profile. This saves time for underwriters and allows faster policy issuance.
• In motor insurance, GenAI analyses repair invoices, accident descriptions, and photos, then produces a structured claim summary for the adjuster. This reduces claim handling time and improves consistency.

This momentum is expected to accelerate overall investment and strengthen the long term growth of Gen-AI outlook for the market.

Market Restraints

Regulatory and Compliance Concerns to Restrict the Market Growth

Regulatory uncertainty around data privacy, automated decision making, and customer protection is slowing the wider adoption of AI in insurance sector. Insurers must comply with strict rules related to data usage, model transparency, fairness, consent management, and auditability, which increases the complexity and cost of deploying AI systems.

• For instance, AI based underwriting models require clear explanations of how decisions are made to avoid potential bias or discrimination. Many insurers delay scaling as they fear non-compliance penalties if the model outputs are not fully explainable. Similar challenges appear in claims automation, where AI decisions must be traceable for regulatory reviews.

As insurance regulators introduce new guidelines on AI governance, data sharing, and algorithmic accountability, insurers take a cautious approach for adoption. This cautious pace limits the speed at which AI solutions can be deployed, directly affecting overall market growth.

Market Opportunities

Rapid Digitalization in Emerging Markets Create Major Opportunity 

Rising smartphone penetration, wider internet access, and government backed digital initiatives are pushing insurers to modernize their platforms. Many companies are moving from paper based processes to fully digital journeys, which creates significant demand for AI driven tools in underwriting, pricing, and customer interaction. 

Insurers in regions such as Southeast Asia, India, Africa, and South America are adopting cloud based systems that support faster deployment of AI capabilities. Digital distribution models supported by AI recommendation engines are helping insurers reach first time buyers in previously underserved areas. As digital payments and customer verification systems become more common, insurers are integrating AI to improve fraud control and operational efficiency. 

The combination of young digital first populations and rising insurance awareness further strengthens this opportunity. This shift positions emerging markets as major contributors to the expansion of the AI in insurance.

AI in Insurance Market Trends 

Partnerships Between Insurers and Insurtech Companies is a Significant Market Trend 

Partnerships between insurers and insurtech companies have become a major trend as traditional carriers look to accelerate their AI capabilities and modernize their operating models. By collaborating with tech-driven startups, insurers gain access to advanced tools such as predictive analytics, AI underwriting engines, automated FNOL systems, and fraud-detection platforms that would traditionally take years to build internally. These partnerships help insurers enhance customer experience through faster onboarding, personalized policy recommendations, real-time risk insights, and seamless claims processing. For instance,

• In July 2025, MetLife partnered with AI-insurtech Sprout.ai to accelerate and automate the claims process across its global markets, including the U.S., Asia, and Latin America. This expanded collaboration follows AI-powered platform demonstrating measurable improvements in claims turnaround times, accuracy, and customer satisfaction.

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SEGMENTATION ANALYSIS

By Application 

Rise in Digital Claims Across Different Industries Accelerated the Segment Growth

Based on application, the market is divided into Claims Processing, Customer Service, Underwriting, Fraud Detection, and Others (Product Development,).

Claims processing secured the largest AI in Insurance market share in 2025 as insurers used AI to automate claim intake, document review, fraud checks, and settlement workflows, which reduced turnaround time and operational cost. The rise in digital claims across auto, health, and property created strong demand for intelligent systems. Further, growing customer expectations for faster payouts also pushed insurers to modernize their claims platforms. Together, these shifts makes claims processing the most widely implemented AI application in the industry. 

Underwriting segment is anticipated to grow at the highest CAGR of 41.6% during the forecast period due to increasing use of AI driven risk models that analyze large and complex datasets to improve accuracy and speed. Insurers are accelerating investments in automated decision engines to deliver instant quotes and expand digital distribution.

By Deployment 

Strong Adoption of Cloud-based Platforms by Insurance Companies to Boost the Market Growth

Based on deployment, the market is divided into cloud and on-premise.

Cloud segment recorded a largest market share in 2025 and anticipated to grow at the highest CAGR of 36.9% during the forecast period as insurers are rapidly shifting to scalable cloud platforms that support high volume data processing, advanced analytics, and faster deployment of AI models. 

Cloud based infrastructure helps insurance companies cut capital costs, streamline operations, and improve integration across underwriting, claims, and customer service systems. The rise of cloud native AI tools is also enabling real time insights, automated risk assessment, and faster product launches. For instance, 

• In August 2025, Wipro partnered with Google Cloud to deploy around 200 AI “agents” across industries including insurance, leveraging Google Cloud’s scalable infrastructure to automate complex workflows.

By Enterprise Type 

High Customer Volumes and Complex Product Portfolios to Boost the Large Enterprises Segment Growth

Based on enterprise type, the market is divided into SMEs and large enterprise.

Large enterprise has taken the largest share in 2025 as they have the financial resources, technical talent, and established digital ecosystems required to implement advanced AI solutions at scale. Their high customer volumes and complex product portfolios created strong demand for automated underwriting, intelligent claims handling, and predictive analytics. Different global insurers also accelerated cloud migration and partnered with technology providers to modernize core systems. These factors allowed large enterprises to adopt AI faster than smaller players and maintain a dominant position in overall market.

SMEs segment is anticipated to grow at a highest CAGR of 38.0% during the forecast period due to rising availability of affordable cloud based AI tools that reduce the need for large upfront investment. Smaller insurers and intermediaries are increasingly adopting automated chatbots, and AI assisted risk scoring to improve efficiency and compete with larger players.

By Technology 

Higher Dependencies of Insurers on Machine Learning Models Leads to Segment’s Dominance

Based on technology, the market is analyzed into Machine Learning, Natural Language Processing (NLP), Computer Vision and Others.

Machine learning captured the largest market share in 2025. Insurers rely heavily on ML models for risk scoring, fraud detection, pricing optimization, and claims automation. These models can process large datasets, learn from historical patterns, and deliver more accurate outcomes than traditional rule based systems. Its widespread use across underwriting, customer analytics, and portfolio management sector further strengthened its dominance. For instance,

• SAS has deployed its Viya 4 AI platform with leading insurers, enabling continuous-learning ML models. These models reportedly reduced fraud investigation time dramatically from months to seconds.

Natural Language Processing (NLP) anticipated to grow at the highest CAGR of 39.4% during the forecast period owing to rising use of text and voice based automation across insurance workflows. Insurers are adopting NLP to extract information from claims documents, interpret customer queries, generate policy summaries, and enhance service quality.

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AI IN INSURANCE MARKET REGIONAL OUTLOOK

By geography, the market is categorized into Europe, North America, Asia Pacific, South America, and Middle East & Africa. 

North America

The North America region held a dominant share in 2025 valuing at USD 4.14 billion. This growth is primarily driven by strong digital adoption among insurers, high investment in AI based underwriting and claims systems, and the presence of major technology providers that supply advanced analytics and cloud solutions. Large insurers in the region are rapidly modernizing legacy platforms and integrating AI to improve operational efficiency and customer experience.

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• In 2025, the U.S. market is estimated to reach USD 3.23 billion. The U.S. market benefited from high consumer demand for quick claims settlement and personalized insurance products that encouraged the service adoption. Additionally, ongoing investments by insurers in cloud infrastructure and generative AI tools also played a major role in U.S. market growth.

Europe

The market in Europe is estimated to reach USD 2.58 billion in 2025 and secure a strong position. Insurers in the region are investing heavily in AI to improve underwriting, enhance risk assessment, and streamline claims processes. Strong regulatory support for data driven innovation is also helping accelerate deployment of AI solutions. In addition, high customer expectations for faster and more personalized insurance services are pushing companies to scale AI across their operations. For instance,

• In May 2025, European Insurance and Occupational Pensions Authority (EIOPA) launched a survey aimed at assessing how insurers across the EU are adopting generative-AI systems, their governance frameworks and future plans.

The region combines mature markets such as the U.K. with high-growth opportunities in insurance sector. Backed by these factors, countries including the U.K. recorded a valuation of USD 0.56 billion, Germany registered USD 0.55 billion, and France recorded USD 0.3 billion in 2025. 

Asia Pacific

After Europe, Asia Pacific region recorded the highest growth rate of 42.2% and reached a valuation of USD 2.80 billion in 2025. In the region, India and China both registered a share of USD 0.58 billion and USD 0.71 billion respectively in 2025. The region’s growth is supported by growing number of insurers in India and China that are aggressively deploying AI to expand into underpenetrated markets. In addition, supportive government initiatives around digital ecosystems and data infrastructure are encouraging investment in AI driven insurance solutions, supporting the Asia Pacific market growth.

South America and Middle East & Africa

Over the forecast period, South America and Middle East & Africa regions would witness a moderate growth in this marketspace. South America market in 2025 recorded USD 0.33 billion as its valuation. This regional market growth is driven by rapid digitalization of financial services and growing penetration of mobile based insurance channels.

• In Middle East & Africa, GCC attained a value of USD 0.16 billion in 2025. This market growth is supported by ambitious national digital transformation programs and strong investment in AI across financial services.
• COMPETITIVE LANDSCAPE

Key Industry Players 

Product Innovation and Generative AI Integration by Insurers to Propel the Market Growth

Key players in the AI in insurance market are prioritizing product innovation and generative AI integration to differentiate their offerings and deepen customer engagement. Insurtechs and incumbents alike are embedding AI into core workflows such as policy issuance, underwriting, and claims triage to deliver instant decisions and personalized coverage. Companies including Lemonade, Tractable, ZestyAI, and Afiniti are combining advanced analytics with conversational AI to offer tailored recommendations, proactive risk alerts, and faster settlements, which improves customer satisfaction and retention.

LIST OF KEY COMPANIES PROFILED:

• Lemonade, Inc. (U.S.)
• Tractable (U.K.)
• ZestyAI (U.S.)
• FurtherAI, Inc. (U.S.)
• Afiniti (Bermuda)
• Metromile, Inc.  (U.S.)
• Counterforce Health (U.S.)
• STS Software(U.S.)
• Root, Inc. (U.S.)
• Next Insurance (U.S.)
• Hippo Holdings Inc (U.S.)
• ZhongAn Online P&C Insurance Co Ltd (China)
• CCC Intelligent Solutions (U.S.)
• Fairmatic (U.S.)
• OneConnect Financial Technology (China)

KEY INDUSTRY DEVELOPMENTS:

• In November 2025, Chubb debuted a new AI-powered optimization engine within Chubb Studio, its global technology platform for embedded insurance distribution partnerships, at the Singapore Fintech Festival. The new capability uses proprietary AI to analyze data and deliver personalized insurance offerings at the point of sale.
• In June 2025, Dai‑ichi Life Group partnered with Capgemini to set up a global capability centre in Hyderabad. The partnership will focuse on AI, data analytics and cybersecurity as part of its digital transformation strategy.
• In March 2025, DXC Technology announced new offerings with ServiceNow, the AI platform for business transformation, to modernize the insurance industry. As an Elite partner, DXC is combining its industry-leading solutions and ServiceNow's AI capabilities and workflows to introduce DXC Assure BPM powered by ServiceNow.
• In January 2025, Generali has launched a research collaboration with the Laboratory for Information and Decision Systems (LIDS) at the Massachusetts Institute of Technology (MIT), one of the most highly regarded universities in the world in applied research. The collaboration aims to research practical applications and examine how Artificial Intelligence (AI) can offer competitive advantages to the insurance industry.
• In April 2022, Aviva, one of the insurers in the U.K., has signed an agreement with Tractable to improve the accuracy and efficiency of U.K. motor claims by using artificial intelligence (AI). By implementing this, AI helps to reduce the potential for errors which can add time to motor claims.

REPORT COVERAGE

The report provides a detailed analysis of the market and focuses on key aspects such as leading companies, types, and leading applications of the product. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years. 

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