Generative AI to Unlock Billions in Insurance Revenue

A landmark report by McKinsey & Company, published in February 2026, has revealed that the integration of Generative Artificial Intelligence (GenAI) could act as a massive catalyst for the insurance industry, potentially unlocking between $50 billion and $70 billion in additional global revenue. This value is expected to be concentrated within three pivotal functions: marketing and sales, customer operations, and software engineering.

Despite a broader softening in global deal flow throughout 2025, the insurance sector has remained a primary target for private equity investors, who are increasingly backing assets that leverage AI to reshape traditional business models.

The Shift Toward Speed and Efficiency

The McKinsey findings highlight a dramatic shift in operational efficiency. By implementing AI-driven tools, firms are reducing underwriting and quoting timelines from several weeks to just a few days. In more advanced deployments, the "quote-to-bind" process—which previously took 48 to 72 hours—is now being completed in as little as one to two hours.

Divergent Global Investment Trends

The report identifies a stark contrast in investment appetites between the Atlantic shores. The United States continues to lead the charge, with private equity investment in insurance growing at a robust 26% annually between 2020 and 2025. In the first half of 2025 alone, US deal volume reached $6.3 billion across 164 transactions.

Conversely, Europe has seen a cooling of interest, with invested capital declining at an average annual rate of approximately 18% over the same five-year period. This suggests a maturing or perhaps more cautious regulatory environment in European markets compared to the aggressive tech-adoption seen in the US.

Comparative Growth and Deal Flow (2020–2025)

The following table breaks down the performance of various insurance segments and regional investment trends as identified by McKinsey:

The Rise of MGAs and Software Providers

Managing General Agents (MGAs) have emerged as one of the fastest-growing segments in the industry. US premiums for MGAs surged from $47 billion in 2020 to $97 billion in 2024—a compound annual growth rate of roughly 14%. Their agility makes them ideal candidates for AI integration.

Furthermore, investment in insurance software and data providers has remained resilient. Investors are drawn to the "sticky" nature of these assets, which benefit from recurring subscription-based revenues and the industry's desperate need for modernized data infrastructure to support AI scaling.

Ultimately, McKinsey suggests that AI is unlikely to replace the insurance model entirely. Instead, it will radically reshape it. The true winners will be the firms that can effectively scale these technologies to move beyond experimental pilots and into core operational reality.