As an industry, insurance no longer views AI as a novelty. But with this embrace comes higher standards. Insurers have become more discerning buyers and plan to invest large percentages of their own in-house budgets into technology products and teams. Insurance IT spending hit $185 billion in 2024 and is forecast to grow 8.5% each year, reaching $420 billion by 2033. At the same time, insurance companies are still looking for insurtech partners to drive innovation and bring new ideas into the industry. The increase in investment and expectations is poised to shift the insurance technology landscape in 2026 in three main ways:
#1: Good data, not pretty colors
For years, insurers have relied on third‑party vendors to drive their technology adoption. Now, after sustained investment in AI talent, engineering teams, and modernized infrastructure, they can build polished interfaces and baseline AI models themselves. This shift means insurers no longer need vendors for surface‑level innovation, like simple LLM wrappers.
While they'll still rely on their insurtech partners, insurers' expectations will start to change. Flashy chatbots, attractive dashboards, and feature‑heavy UIs won't move the needle unless they solve a real business problem. Insurers are looking for differentiated capabilities like proprietary data pipelines and advanced AI models that meaningfully outperform what they can create internally. Anything else is lipstick on a pig, and insurers aren't falling for it.
#2: Integrated technology stacks
When insurers do find the innovative technology they need, the systems they're already running can often stand in the way of implementation. Over time, insurers have added tools and platforms piece by piece, creating a maze of legacy systems that rarely communicate cleanly with each other. This fragmentation creates a chain reaction. Siloed systems lead to integration bottlenecks, which slow the adoption of new technology. In an industry where compliance and operational efficiency matter, this drag has become a liability. Moving into 2026, insurers will prioritize connected technology stacks to accelerate the adoption of best-in-class solutions, reduce security risks, and future-proof IT resources.
One of the major priorities for technology integration in 2026 will be adopting MCP (Model Context Protocol). MCP is an open, standardized protocol that allows AI models to securely and consistently interact with external tools, data sources, and internal systems. For a highly regulated industry like insurance, where data privacy, auditability, and controlled access are critical, MCP provides a framework that enables AI-driven capabilities without compromising customer data or operational safeguards. Insurers leveraging AI in-house will demand that their technology partners meet these standards, allowing them to securely build and innovate.
#3: The death of noisy alerts
Insurers are masters at identifying, measuring, and mitigating risks, making sure no stone goes unturned. Fraud alerts are a common practice, giving claims teams a heads-up when anomalies are detected. But when helpful notifications turn into an avalanche of meaningless signals, alerts quickly turn from necessary to completely ignored. Constant pings, red flags, and false positives not only overwhelm adjusters but also erode trust in the tools themselves, leading professionals to either tune out alerts or fall back on manual investigation.
In the coming year, insurers will be looking for evidence-based, noise-free insights that directly inform decision-making. By reducing false positives and standardizing how online evidence is used in claims workflows, insurers can finally strike the balance between automation and accuracy, protecting their reserves while preventing burnout across adjuster, SIU, and litigation teams.
Looking Ahead
As insurers move into 2026, their expectations for technology are sharper, pragmatic, and strategically aligned with long-term business goals. The increase in standards will push the industry as a whole forward, setting the stage for major innovations in the year to come.
