In our report US Tech Forecast 2026: What It Means For Insurance, Forrester projects that industry technology spending will increase by $173 billion in 2026 — up 7.8% relative to last year. After several years of rapid change driven by digital adoption, rising risk complexity, and shifting customer expectations, insurers are now moving into a new phase. Technology is no longer only about modernization; it’s about intelligence, efficiency, and differentiation. Insurance will represent 6% of US total tech spending in 2026, underscoring the industry’s reliance on digital capabilities to drive results.

Why Insurance Tech Spending Continues To Accelerate

Insurers operate in a volatile environment. Climate change is increasing the frequency and severity of catastrophic events. Cyberthreats continue to expand in scale and sophistication. Social inflation and regulatory pressures are driving loss ratios higher. At the same time, customers increasingly expect seamless, digital-first, and personalized experiences comparable to those offered by leading consumer brands.

These forces are pushing insurers to shift technology from a back-office cost center to a strategic enabler of growth, efficiency, and resilience. Advanced analytics, artificial intelligence, cloud platforms, and modern core systems are becoming fundamental to improving underwriting accuracy, accelerating claims processing, and delivering differentiated customer experiences.

Insurers allocate a significantly higher share of their tech budgets to software than other US industries. This reflects the industry’s focus on AI-enabled platforms, analytical tools, digital experience technologies, and core system modernization rather than on hardware-heavy investments.

Customer Experience And IT Security Shape Tech Priorities

Cloud migration and system modernization help insurers issue policies faster and provide real-time servicing, while AI and data analytics enable personalized coverage, dynamic pricing, and proactive risk management. Automation streamlines claims and underwriting processes, boosting operational efficiency, and cybersecurity investments safeguard sensitive data. APIs and ecosystem integration enhance collaboration with partners, brokers, and third-party data providers by improving access to traditionally monolithic systems. Additionally, IoT and telematics support usage-based insurance models, shifting risk management from reactive to proactive strategies.

AI Moves From Experimentation To Operations

One of the clearest themes in 2026 is the operationalization of AI. Insurers are moving beyond pilot projects toward embedding AI directly into core business processes. Top IT priorities include AI-enabled software development, real-time AI-enhanced operational support, and AI-powered business applications.

This shift reflects a broader reality: AI delivers value only when it is tightly aligned to business outcomes. We predict that in 2026, AI and automation will improve expense ratios at the top 50 insurers by two points — making AI a critical lever for profitability as pricing competition intensifies.

What Insurance Tech And Business Leaders Should Do In 2026

  1. Move From Flashy AI Pilots To Integrated Systems
    Insurers should prioritize AI capabilities that fundamentally improve operating performance. Agentic AI and workflow orchestration can automate complex, multistep tasks such as first-notice-of-loss triage, underwriting data extraction, and intelligent call routing — while maintaining regulatory compliance and strong governance.
  2. Upskill Employees To Work Alongside AI
    As AI takes on more routine work, employees in underwriting, claims, and service must be trained to interpret, explain, and oversee AI-assisted decisions to ensure compliance and maintain “human in the loop” accountability. Generative AI can also act as a knowledge transfer engine in an industry facing persistent talent shortages.
  3. Double Down On The End-Customer Experience
    Customer experience (CX) scores for auto and home insurers are declining, even as rates rise. In this environment, CX becomes a primary driver of retention and profitable growth. Insurers must invest in technologies that support seamless omnichannel journeys, transparent self-service, and superior agent and broker experiences.

For insurers that successfully make the shift from modernization to intelligence, technology will not just support the business — it will define its competitive advantage.

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