For insurers, 2025 marked a reset in core systems strategy. After a decade spent patching legacy and modern-legacy platforms, layering point solutions, and stitching together data across disconnected architectures, insurers are now shifting toward rebuilding the core operational backbone required for resilience, agility, and sustainable growth. This is not a cosmetic upgrade; it's a structural re-architecture. The industry signal is now evident: competitive advantage will hinge on the agility, intelligence, and adaptability of an insurer's core platform.
This shift reflects a clear market reality: after years of incremental fixes and deferred modernization, insurers are being forced back to fundamentals. Achieving long-term, risk-adjusted profitability in a volatile environment while meeting rising customer expectations now depends on strengthening the foundations — systems, data, and operating structures — before meaningful innovation can take hold.
Insurers are entering 2026 with one clear mandate: Strengthen the core to unlock scalable, AI-enabled growth. GenAI and agentic AI have transformed expectations across underwriting, claims, and service, but legacy architectures cannot support the data fluidity, governance, and orchestration required. Modernization is no longer a technology upgrade; it is a business model reset.
Below are the key trends and imperatives that I believe will define the insurance sector in 2026:
1. Legacy Systems
Across all lines of business, insurers recognized that 'legacy' and 'modern-legacy' systems — platforms and systems built in the last 10–15 years, but architected on monolithic design principles — are already outdated and have become a structural barrier to progress.
As volatility increased across climate, capital, and customer expectations, the constraints of modern legacy systems became harder to work around and impossible to ignore. These platforms were never designed for API-first distribution, dynamic product configuration, governed AI, continuous delivery, cloud elasticity, or complex ecosystem integration. The result is the same across markets: slow product development, limited data flow, high integration cost, and constrained customer experience innovation.
Imperative for insurers: Seeking efficiency improvement alone is no longer enough, nor should it be the goal. Insurers must shift from a traditional, technology-centric ('inside-out') process automation approach to a more customer-centric ('outside-in') operating model redesign that is squarely anchored on customer journeys, contextual intelligence, and connected data. This requires replacing rigid, policy-centric architectures with data-fluid, AI-ready core platforms that evolve at market speed.
2. The Legacy–AI barrier
It is real, and insurers are prioritizing platforms that remove it. AI advanced at extraordinary pace in 2025, but insurers discovered a hard truth: AI cannot deliver value if the core platform cannot provide clean, contextual, real-time data. Siloed, batch-based architectures choke AI's ability to reason across the customer lifecycle, perform real-time risk adjustment, orchestrate multi-step workflows, and meet regulatory explainability standards.
Imperative for insurers: The market trend is clear: 2026 is the year AI becomes operational, moving out of innovation labs and into the core workflows of underwriting, claims, billing, service, and distribution. However, AI is only as powerful as the governance and data lineage behind it. To ensure confidence in execution and enable the system to operate at its full intelligent potential, the next generation of cores must embed intelligence at the platform layer, ensure end-to-end traceability, support natural-language workflows, orchestrate AI agents safely, and provide explainable models by design. Systems that can't meet these requirements will be replaced, not augmented.
3. Continuous underwriting
Prioritizing continuous underwriting and real-time risk intelligence will be key in 2026. Static pricing models tied to annual cycles can no longer keep pace with market volatility. 2025 exposed a fundamental shift in how data works inside an insurer: the archive-and-retrieval model of the past is no longer viable in a market that demands real-time intelligence. Data has moved beyond being a historical record that's stored and is now a live, strategic asset that powers real-time decisions, customer engagement, and regulated AI at scale.
Imperative for insurers: Insurers need platforms that treat data as live, structured intelligence rather than historical policy snapshots. That requires event-driven cores capable of ingesting continuous signals, recalculating exposure dynamically, and orchestrating rules and AI-driven decisioning in real time. Only with this architecture can insurers shift from reactive loss absorption to proactive risk mitigation, precision pricing, and real-time portfolio steering embedded directly into operational workflows.
4. Trust, transparency, and governance
They are now hard requirements, not optional values. In 2025, trust became a measurable business KPI. Regulators, and increasingly customers, are demanding clarity on how insurers handle data, automate decisions, and deploy AI. From the EU AI Act to new North American standards, scrutiny now requires model accountability, explainability, auditability, bias monitoring, and transparent decision trails.
Imperative for insurers: Trust will become the defining currency of the insurance industry and it will hinge on core system governance, not just goodwill. Trust must be engineered, not declared. Core systems will increasingly differentiate on their ability to provide full data lineage, governed workflows, explainable AI, audit-ready logic. This governance layer is becoming a top-three buying criterion for CIOs, CTOs, and CDOs.
5. Climate volatility
It is forcing a radical re-engineering of property risk assessment. The convergence of climate shocks, fraud complexity, and operational pressure is accelerating demand for unified data orchestration, embedded fraud detection, advanced claims automation, and predictive resilience modeling.
Imperative for insurers: The static, inflexible policy-centric architectures of legacy systems must give way to intelligent, adaptive platforms. Insurers need cores that can merge climate data, IoT telemetry, satellite imagery, fraud analytics, operational AI, and human oversight into governed, auditable workflows. Modern platforms must support real-time risk signals, predictive resilience modeling and event-driven orchestration, enabling insurers to manage volatility, prevent loss and maintain trust at scale. Efficiency, accuracy and resilience must now co-exist in the same system.
6. Group benefits
They are evolving into intelligent, portable well-being ecosystems. Employers and employees alike are demanding personalized, adaptive propositions. Traditional product-centric systems cannot support the flexibility needed for next-generation benefits design.
Imperative for insurers: Success depends on cores that can orchestrate outcomes, not just administer products. This means platforms that support continuous personalization, governed data flows, multi-party ecosystems, and contextual well-being journeys. These platforms must enable outcomes such as benefits that adjust automatically to life events, proactive well-being support, and seamless portability as people move between roles or working patterns. In this model, value comes not from the product but from the continuous, connected experiences that surround it.
7. Pet insurance
It is rapidly becoming a proving ground for ecosystem-driven, customer-centric transformation. Rising vet costs, increased pet humanization, and demand for digitally enabled care are accelerating the shift from transactional reimbursement models to proactive well-being ecosystems. As pet insurance evolves, insurers are beginning to confront foundational complexities, especially the lack of standardized coding and wide cost variability across veterinary services, which makes product design, underwriting, and pricing more difficult than in human health. These challenges are precisely what next-generation platforms must address.
Imperative for insurers: Pet insurers must operate on platforms capable of turning real-time data into proactive care. This means ingesting real-time pet health telemetry (e.g., wearables, vet diagnostics), integrating across vet, nutrition, and behavioral care networks, orchestrating digital ecosystem partners, and dynamically adjusting coverage and pricing based on evolving health and lifestyle data.
Competing in this new model requires a modern core platform that turns real-time health and lifestyle data into personalized care at scale. Leaders will use intelligent, AI-ready core systems to bring order to this fragmented landscape, enabling data ingestion from wearables and vet systems, dynamic pricing based on real behavior, personalized wellness plans, and preventive care journeys tailored across a pet's life.
The future of pet insurance isn't in replicating traditional health coverage, but in creating connected well-being ecosystems that anticipate needs, deliver real-time value, and position insurers as trusted care partners, not just payers of last resort.
