“You close your eyes
And hope that this is just imagination
Girl, but all the while
You hear a creature creeping up behind
You’re out of time”

• Michael Jackson’s “Thriller”

Just over 40 years ago, those words from the second verse of Michael Jackson’s song “Thriller” hit the airwaves, redefining generations of pop culture and music with the song and the album. As the highest-grossing album of all time across the world, it is considered to have revolutionized not just music but also music videos and cinema. It influenced fellow artists, introduced the concept of the blockbuster album, transformed music videos into a serious art form, and redefined how future music was introduced to the market.

Like the impact of Thriller on the music industry, the insurance industry is likewise being redefined and entering a new era of insurance – one challenged with economic volatility, increased risks, rapid emergence and adoption of new technology and AI, a growing protection gap, and rising customer expectations that are redefining insurance value, convenience, and trust.

The change has been building, but too many have ignored it or deferred dealing with the change. But just like the verse states … there is nowhere to run, and we are running out of time.

Insurers must embrace this new era of insurance intelligence that redefines their operating model and technology foundation. While insurers are very aware of these challenges (based on information in our upcoming Strategic Priorities research), they lack a strategy and execution of initiatives that will reshape their operational model and technology foundation to break out of the business-as-usual mindset. These top-of-mind issues have intensified for insurance executives. Most of them understand what is at stake and they are worried about what is creeping up on them.

We are a quarter of the way into the 21^st century, but still operating on 20^th-century business models and technology. To navigate this new era, leaders continue to double down on business model redefinition and AI and technological innovation.

If there was ever a time to let strategy drive change in the business, it’s now. The future won’t be captivated by yesterday’s achievements. Tomorrow’s plans won’t come to fruition without a strategy focused on a new insurance business model and technology foundation that meets the demands of the future, not of the past … now.

It should be clear … business as usual is no longer viable in a new era of insurance intelligence.

The trends for 2026 reinforce this view and emphasize why the stakes are high for insurers. Here are a few of those trends.

Trend 1: Unlock Growth Strategies with a High-Performance Operating Business Model for a New Era of Insurance

While your strategic goals and growth plans may be the right ones, is your business operating model built to achieve them? More than likely, no.

Most insurance operating models were crafted over decades around a myriad of constraints and business assumptions and challenges. The operating model evolved to support this legacy construct by layering in technologies over legacy with the hope of optimization, resulting in inefficient, unprofitable, and employee-constrained operations. The result is a layered, complex technology foundation that has increased costs and decreased customer value.

Insurers need to change the economics for loss ratios, expense ratios, risk selection, and risk prevention. The old methods of modernization, which included a lot of customization in how they always did business, did not achieve the results needed.

Instead, insurers must take advantage of automation planted within the core, particularly with intelligent automation using GenAI and Agentic AI. This will redefine and optimize the business processes and operating model to levels we have not seen before. The right business operating model can turn strategic potential into market-beating results and open the door to a wonderland of possibilities that enable agility, scale, operational optimization, and innovation in a fast-changing market and a new era of insurance.

Trend 2: The Future of Insurance Tech is Now: A Cloud Native and AI Native Core Technology Foundation

The cost and impact of legacy debt is poisoning profit potential and dragging down every function, from customer service through product development. With increasing retirements and loss of institutional knowledge and skills, the difficulty of leveraging data for insights, decreased operational productivity due to manual workarounds, lack of speed to market for new products, and the inability to use new technologies like GenAI and Agentic AI to drive operational optimization, legacy debt creates a significant operational risk.

Next-gen Cloud- and AI-native core systems are extremely flexible and are less expensive and time-consuming to upgrade and maintain, reflecting a foundational move to evergreen solutions that ensure quick updates, instant access to new innovations, and the ability to stay at the forefront of change. The technology that goes into these systems is, in many respects, timeless.

Key question: What is your core system provider’s vision, and do they have an AI-native solution today, not in the next 2-3 years?

Replacing legacy core technology with next-gen intelligent core has never been more important. It is foundational to achieving strategic business goals such as profitability, operational optimization, growth, and innovation.

Trend 3: AI Strategy + Intelligent Tech Powers Real Business Value and Optimization

AI for insurance is the transformative technology of our lifetimes. Lack of an AI strategy, plus inaction, will have real business consequences.

GenAI and Agentic AI are more than new tools—they are strategic catalysts with inconceivable business value. They have the ability to improve everything from risk and safety to operations and profits. Making the case for GenAI or Agentic AI based on just one or two business functions misses the AI point. The question isn’t, “How will we use AI?” It is “How won’t we use AI?” How fast and how broadly can we adopt and reimagine our business models?

A broad strategic approach establishes a foundation that leverages GenAI and Agentic AI across the entire value chain, from providing guidance and answering questions to specific use cases for complex areas. AI reduces operational costs in areas such as claims, underwriting, billing, and policy administration. It improves operational efficiency and can substantially impact expense ratios and strengthen overall financial metrics.

The broad strategy—not a tactical one—unlocks the compounded benefits that far exceed the sum of individual task improvements.

Trend 4: Zombie InsurTech Companies Endanger the Future of Insurance

In the insurance industry, the night of the living dead is growing for InsurTech companies with zombies—whether publicly traded, founder owned or owned by PE or VC firms. Zombies are companies so laden with debt that they are just stumbling by on the brink of survival, barely able to pay even the interest on their loans. Many are just one bad business hit away from dying off for good.

Here are some InsurTech examples:

• PE-owned InsurTechs cannot make their interest payments on their debt or don’t have the cash to run the business, and they require refinancing at higher levels.
• The PE acquisition approach to roll-up tech firms dilutes what they can invest in each of the solutions. This short-sightedness won’t allow InsurTechs to meet the rapid changing marketplace.
• VC investments lack the returns needed, resulting in the fire sale of some startups.
• Founder-owned, privately held InsurTechs may be small businesses (those between $10M – $75M) managed as “lifestyle” companies with little focus on financial metrics that publicly traded, PE or VC backed firms have. These firms are often not looking into the future. Will they be around to address the issues that crop up even 3-5 years from now?

In all these cases, they are struggling with profitability and may lack funding for R&D investment in the product, especially for AI. The result is a growing group of zombies who lack the financial fortitude to invest in business and technology, ultimately creating significant risk and real business consequences for insurers.

In today’s world, we have functional parity for core solutions. What we don’t have is parity in investment in the future, particularly for AI. In an industry that depends on strategic partnerships and advanced technology, given the pace of change with risk, operations, customer expectations, products, and technology, the right partner matters more than ever.

The Future of Insurance is Now

Our industry, built on risk management, now faces profound risk in terms of its legacy operating model and technology foundation, which is challenging insurers, from operational costs and profitability to product innovation, and more. Insurers must create a strategy and plan that is aggressively executed to address this risk. It will influence and alter the industry and who we consider leaders. The old foundation may still exist, but today’s reality is testing it and shaking it to the core.

Instead, just like Michael Jackson in the video, we will see a growing number of zombies in the industry, those unable to adapt, innovate and grow profitably to meet the demands of a new era of insurance.

Moving into 2026, insurers should update their strategy and plan by:

• Rethinking your business operating model for a new era of insurance: Challenge the traditional mindset and maximize the potential of today’s next-gen, intelligent technology that can bend the cost curve, drive profitable growth, productivity, and operational efficiency to create competitive differentiation in the market.
• Reassess your partners through a strategic and financial lens: Insurers are making 10 – 15-year commitments to core technology partners that must have cutting-edge technology and AI capabilities to remain competitive. The partners must have the strategy and financial runway to deliver sustained R&D and innovation, let alone survive 5 years in their current form.
• Invest in a new technology foundation that is cloud- and AI-native to drive real business value: Create an AI strategy with partners that embrace AI, strengthen data foundations, and leverage next-gen intelligent core systems to drive operational efficiency, reduce costs, enhance quality and consistency, improve customer experience, mitigate risks, and foster a culture of innovation and adaptability.
• Transform the workforce: Attract, retain, and upskill the workforce to meet the demands of a digital and AI-first environment that embraces a human-centric AI culture and environment including bridging the skills gap between legacy and next-gen capabilities.
• Push boundaries – Experiment and innovate. Recognize that change, business models, and technology are never done, requiring continuous innovation by pushing boundaries and taking an outside-in view.
• Build synergies and enhance competitive advantage – Keep a constant, sharp focus on operations, technology, and strategy to identify synergies and areas of advantage to drive optimization, growth, and long-term business innovation.

If there was ever a time to let necessity drive change in the business, it’s now.

Time is moving fast. Risk is moving fast. Technology is moving fast. You need to as well.