Nearly half of global insurance executives believe their organisations are among the industry's AI leaders, yet new KPMG International research has found that confidence may be running ahead of meaningful business transformation.
The report, Unlocking AI value in insurance, found that 44% of respondents place themselves in the top quartile for AI transformation and none consider themselves significantly behind. Yet functional redesign remains rare: no surveyed organisation reported having fully redesigned sales and distribution or underwriting around AI, while only 3% have reached that stage in policy servicing and claims management.
The findings revealed a growing disconnect between urgency and readiness. While 77% believe failing to redesign their enterprise architecture for AI will undermine competitiveness within five years, 71% said their primary use of AI remains content generation and routine task automation. Just 29% reported running front-to-back processes through AI agents or automation, while 68% said moving too slowly on AI transformation is a greater risk than moving too fast.
Frank Pfaffenzeller, global head of insurance, KPMG International, said: “The insurance industry understands that AI has the potential to reshape competition, customer expectations and business models. The challenge is that many organisations remain focused on efficiency gains rather than asking how AI might fundamentally change the kind of insurer they could become. The gap between activity and transformation is where the real opportunity and risk now sit.”
More than nine in ten insurers (92% of respondents) said AI is helping improve productivity and reduce operating costs, compared with only 25% using it to drive growth through new products, services and AI-enabled offerings. Nearly half of AI budgets are directed towards operational and back-office efficiency, while just 5-10% goes to new products and revenue models.
Measurement has not kept pace with spending. Only 11% of insurers surveyed describe their view of AI return on investment as very clear, while 23% reported limited clarity or no clear view. The report suggested this creates a risk that progress is measured through activity and adoption rather than changes in cost, cycle time, customer outcomes or growth.
Only 11% of insurers surveyed say they have the strong data foundations and governance needed to scale AI beyond pilots. A further 55% described themselves as moderately ready, while 21% are only partially ready and 13% are not ready, citing fragmented data, poor quality, unclear ownership and legacy systems.
The research was conducted between 20 and 29 May 2026 with insurance leaders across 20 countries and six regions, representing organisations with 500 or more employees across all major insurance sub-sectors.
