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AI could reshape insurance competition as profits growth lags premiums
McKinsey estimates gross written premiums rose about 4.9% annually since 2005 to roughly $8.3 trillion in 2025, while profits before tax grew about 4.3% to around $580 billion, with higher capital needs cited as a factor.
McKinsey & Company says artificial intelligence may create new competitive dynamics across the global insurance sector, favoring insurers, distributors, and technology providers that prepare early as industry structures evolve. In its analysis, McKinsey points to steady premium growth over the past two decades, but limited improvement in operating leverage across property and casualty, life, and health insurance. The firm estimates gross written premiums have increased by about 4.9% per year since 2005, reaching approximately $8.3 trillion in 2025, while profits before tax have grown about 4.3% over the same period to roughly $580 billion. McKinsey attributes the slower profit growth in part to rising capital requirements. It also argues that insurance has historically resisted major disruption, noting that changes like globalization, digitalization, and platform-based models have not significantly altered the industry’s underlying economic structure, with competition shifting more gradually. Despite the sector’s relative stability, McKinsey says AI is now adding pressure by potentially affecting four long-standing industry challenges: slower growth and declining relevance, high distribution costs, limited productivity gains, and the historically gradual pace of change. The firm suggests the insurance industry in 2026 would still look recognizable to executives who viewed the sector in 2006, while acknowledging that stability has supported shareholder returns through dividends and buybacks.