Most insurers agree that AI will reshape the industry, but very few have operationalized it. New research from AutoRek finds that 82% of insurers believe AI will dominate the industry’s future, yet only 14% have fully integrated it into their financial operations. At the same time, 44% of firms face settlement periods exceeding 60 days, and 14% of operational budgets are going toward correcting errors caused by manual processes.
AutoRek’s 2026 Insurance Report, based on 250 interviews with insurance and healthcare insurance managers across the UK and U.S., points to a growing performance gap between firms modernizing their back offices and those still running on fragmented systems and manual workflows.
“Insurers know where the industry is heading. The challenge is that most haven’t translated that awareness into operational change. Settlement cycles are lengthening, data environments are getting more complex, and the firms that have already embedded automation into their financial operations are pulling ahead. The longer firms wait to modernize, the harder it becomes to close that gap,” said Tony Shek, Insurance Sector Lead at AutoRek.
Settlement strain meets stalled AI adoption
Settlement cycles continue to lengthen under volume pressure. Firms processing more than 10 million transactions annually average 59-day settlement periods, compared to 52 days for smaller peers. Spreadsheet reliance (46%), high transaction volumes (41%) and fragmented data (41%) were identified as the primary drivers of delay. With transaction volumes expected to grow by 28.7% over the next two years, these pressures will only intensify.
AI adoption, meanwhile, remains deeply uneven across the sector. 6% of firms report no AI usage at all, and the barriers to progress are well documented. Legacy system integration challenges (42%), fragmented data environments (39%) and a shortage of in-house AI expertise (40%) are holding firms back. Over half describe their data governance frameworks as early-stage or developing, raising questions about how effectively AI can be deployed at scale.
Data fragmentation adds to the urgency
Insurers manage an average of 17 data sources feeding their premium processes, and 54% cite different systems and data architectures as the biggest post-merger integration roadblock. This level of fragmentation makes it difficult to layer on automation, without a trusted partner, or absorb new business through M&A without introducing additional operational risk.
The findings suggest that the industry recognizes the need to act. Half of firms are now prioritizing AI and machine learning, 42% are focusing on automation of back- and middle-office functions, and 51% say regulatory requirements are driving their modernization decisions.
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