Top 5 Trends Shaping the Insurance Industry in 2026

From compliance and cybersecurity to AI-driven efficiency and embedded distribution models

As insurers navigate ongoing regulatory pressure, rising customer expectations, and rapid technological change, 2026 will be a pivotal year for transformation across the insurance value chain. From compliance and cybersecurity to AI-driven efficiency and embedded distribution models, insurers are being challenged to prioritise modernisation, without compromising trust or resilience.

Leading provider of core insurance platforms, Fadata, pinpoints the top five trends defining the insurance industry this year, and what insurers should consider to remain competitive.

1. Compliance: Adapting to a Shifting Regulatory Landscape

Regulatory complexity continues to intensify, with evolving requirements around data protection, operational resilience, ESG reporting, and AI governance, consequently, insurers face growing compliance workloads, higher costs, and increased scrutiny from regulators. Manual processes and fragmented systems are no longer sustainable.

In 2026, more insurers will make the move from reactive compliance to continuous, technology-enabled compliance. Recognising the role of RegTech, automation, and real-time reporting tools so that they are better equipped to balance compliance demands with limited internal resources. Insurers that invest in modern compliance platforms and integrated data governance tools, will reduce risk, lower costs, and gain greater regulatory confidence, ensuring product innovation and customer experience are the drivers of their business.

2. Security: From Cyber Risk to Data Sovereignty

Cybersecurity remains a top board-level concern, but the focus is shifting beyond traditional threats to include data sovereignty, third-party risk, and systemic exposure. Emerging concerns include increased ransomware and supply-chain attacks, greater reliance on cloud and SaaS ecosystems, and regulatory expectations around where and how data is stored and processed.

In 2026 we will see insurers respond by strengthening identity and access management, adopting zero-trust security models, and prioritising vendors with clear data residency and sovereignty guarantees. Gone are the days when security is an IT only issue. Security has become a strategic differentiator tied directly to customer trust, regulatory approval, and brand reputation.

3. AI: Driving Efficiency, Intelligence, and Customer Centricity

AI is rapidly moving from experimentation to real-world adoption across underwriting, claims, customer service, and operations. High-impact AI use cases include automated document processing and claims triage, intelligent underwriting and risk assessment, AI-powered chatbots and virtual assistants for customer engagement, and fraud detection and anomaly monitoring.

In 2026, insurers will be looking to embrace AI tools that are explainable, auditable, and compliant. To utilise AI well and deploy AI responsibly, insurers will be considering which tools can help eliminate redundant processes rather than layering AI on top of inefficiency and will be looking to upskill teams to work effectively alongside AI. By doing so, insurers are set to benefit from reduced operating costs, improved decision-making, and will be able to deliver faster, more personalised customer experiences.

4. Embedded Insurance: Scaling Through Ecosystems and White-Label Models

Embedded insurance will continue its rapid growth in 2026, driven by partnerships with retailers, platforms, and digital ecosystems. The demand for seamless, in-context insurance experiences, the expansion of APIs and digital distribution platforms, and vitally, increased acceptance of white-label and “insurance-as-a-service” models, are all playing a part in making the embedded movement a swift one.

2026 will see more insurers embracing embedded and white-box strategies which will enable them to unlock new revenue streams, reach underserved segments, and scale faster without traditional distribution constraints. In order to do so, insurers will need to adopt the modular, API-first core systems which help support them to deliver flexible product configuration and pricing, while strong underwriting and partner governance frameworks are essential.

5. SaaS: Modernising Insurance Through Cloud-First Platforms

SaaS is becoming the preferred model for core insurance systems, analytics, and customer engagement tools. Insurers benefit from faster deployment and scalability, lower upfront infrastructure costs, continuous innovation and automatic updates, as well as improved integration with ecosystems and partners.

In 2026, we expect to see more insurers releasing the shackles of legacy system dependency and overcoming their data migration and security concerns to adopt SaaS strategically. While cultural resistance to operational change can always be a challenge, gaining agility, resilience, and the ability to innovate at speed will be crucial as customer expectations and regulatory landscape shifts dictate what is required for an insurer to succeed.

Liselotte Munk, Fadata CEO comments: “The insurers that will lead in 2026 and beyond, are those that treat compliance and security, AI, embedded distribution, and SaaS, not as isolated initiatives, but as connected pillars of a modern insurance operating model. These insurers will have the power to set a new course in the insurance industry that is more aligned with global changes and customer needs.”

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About Fadata
Fadata boasts the super-power to build the future of insurance. With a heritage spanning over more than three decades, we are a leading provider of solutions for insurance companies globally and offer a highly flexible SaaS model. Together with our customers and our partners we have created an expert community that is driving customer engagement, innovation and business value, making change happen and impacting millions of people’s lives every day.

Fadata has clients in over 30 countries across the globe. Headquartered in Munich, with international offices in Spain, Bulgaria, Denmark, Serbia, Peru and Malaysia, Fadata is backed by Private Equity firms Riverside and Lovell Minnick.

For more information, please visit www.fadata.eu, and join us on LinkedIn to stay in touch.
Media contact:

Kerri Chard
The PR Room
Email: kerri.chard@theprroom.co.uk
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