By Luca Russignan, Global Head of Capgemini Research Institute for Financial Services
This chasm is widest across personalization, data infrastructure, scaling AI, and underwriting transformation. These are the four areas where the disconnect between investment and impact is most pronounced.
From static to dynamic: how consumers are redefining insurance
Capgemini's World Life Insurance Report 2026 shows that 68% of adults under the age of 40 value life insurance. Yet, adoption remains low. The gap isn't about awareness – it's about relevance. Young consumers want living benefits – financial flexibility for life events, wellness support, critical illness coverage – not just a payout upon death. This transforms insurance from a buy-and-forget product to an active financial planning tool.
The execution gap is stark. Two-in-three (67%) younger consumers want phygital engagement that blends physical and digital touchpoints seamlessly, yet only 16% of insurers offer truly integrated capabilities. Similarly, only 36% of carriers provide flexible premium models that adapt to changing life circumstances. This isn't just a life insurance story – the shift spans property and casualty, health, and beyond. Many insurers say today’s customers expect more personalized and relevant experiences. When protection flexes to real moments, insurers win on relevance, not just rate. Therefore, insurers redesigning products around life-stage needs rather than static coverage are capturing a disproportionate share of young customer growth.
The data foundation: why personalization requires infrastructure, not just intent
Personalization isn't a feature challenge; it's an architecture challenge. Our research shows that 70% of insurers say data fragmentation and quality challenges limit their ability to derive actionable insights. Without this foundation, personalization stays more a promise than practice.
The payoff for getting it right? Significant. Seventy percent of insurers report improved retention rates when they integrated customer service insights across functions. One global life insurer we studied unified customer data and transformed operations: as a result, campaign retargeting dropped from one day to five minutes, quote generation increased 60%, and email open rates lifted 24%. Dynamic pricing, customizable add-ons, and tailored experiences all require federated data ecosystems and enterprise marketplaces that enable real-time decisions.
Scaling AI: from data foundation to customer outcomes
With data infrastructure in place, AI amplifies personalization at scale, but here's the paradox: while insurers are planning AI agent deployments at scale or increasing their generative AI investments, most pilots stay pilots. AI gets stuck in individual functions, creating technical debt and inconsistent operational models rather than transformation.
The harder half isn't technology deployment – it's process redesign. You can't bolt AI onto legacy processes and expect enterprise-wide transformation. We hear insurance leaders cite regulatory and compliance concerns as their biggest adoption constraint. That caution is warranted, but it often masks a deeper challenge: redesigning how work actually happens.
Real impact emerges when AI is embedded across processes, systems, and operating models turning data infrastructure into tangible customer outcomes. The insurers reporting improved underwriting outcomes through advanced capabilities didn't just invest in technology; they leveraged these capabilities to address critical underwriting gaps while optimizing exposure management.
The underwriting evolution: what insurance becomes
All of this adds up to fundamentally redefine underwriting itself. The risk landscape has changed, and underwriting models are evolving to match. Nearly seventy percent of the world's population will live in urban centres by 2050, concentrating people, wealth, and infrastructure in ways that amplify exposure. Secondary perils are surging: annual losses have tripled since the early 2000s, insured losses have grown sixfold, and Munich Re reported $106 billion in global losses in H1 2025 alone.
Here's the opportunity: eighty percent of insurers recognize the need for real-time, dynamic underwriting, yet only 11% have the maturity to execute it. That 11% have built the foundations that we've discussed – unified data ecosystems, AI deployed at scale with redesigned processes – and they're now capturing the pricing advantage through demonstrated loss prevention capabilities. Advanced risk mitigation means actual prevention: better risk selection, proactive policyholder engagement, data-driven loss control. Intelligent platforms, predictive analytics, and advanced risk models are redefining how risks are assessed, priced, and managed.
What 2026 reveals
The path forward requires both foundation and execution. To deliver a dynamic experience requires data infrastructure, scalable AI depends on redesigned processes, and underwriting transformation needs both. Yet insurers can't wait to complete one stage before starting the next. Leaders are building data ecosystems while deploying AI, redesigning processes while reimagining underwriting. The difference is they understand dependencies: progress can happen in parallel, but foundations cannot be skipped. Those who invest in technology without organizational redesign – or pursue one dimension in isolation – will risk asking why their transformation stalls.
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