Insurance in the Age of AI: How Artificial Intelligence Is Changing Insurance in 2026

Artificial intelligence has quickly moved from something that felt futuristic to something that is now part of everyday life. From virtual assistants and online shopping recommendations to fraud detection and customer service, AI is being incorporated into more industries every year — and insurance is no exception.

In 2026, artificial intelligence is playing an increasingly important role throughout the insurance industry. Insurers are using AI and machine-learning technologies to analyze information, identify patterns, assist with claims, detect potential fraud, improve customer service, and support underwriting and pricing decisions. The National Association of Insurance Commissioners (NAIC) reports that AI is being used across multiple areas of the insurance lifecycle, including marketing, underwriting, pricing, claims, and fraud detection. (NAIC Content)

But what does that actually mean for you as an insurance customer?

Does AI change how your insurance is priced? Could it affect a claim? Is your personal information safe? And will artificial intelligence eventually replace the insurance professionals you work with?

Let’s take a closer look at how AI is changing insurance — and what consumers should know.

What Is Artificial Intelligence in Insurance?

Artificial intelligence refers to technology that allows computer systems to perform tasks that traditionally require human intelligence, such as analyzing information, recognizing patterns, processing images, understanding language, and making predictions.

In insurance, AI doesn’t necessarily mean a computer is independently making every decision about your policy.

Instead, AI can be used as a tool to help insurance companies and professionals process enormous amounts of information much faster than would be possible manually.

For example, an insurer may use AI to:

• Analyze photographs of vehicle damage
• Identify patterns that may indicate insurance fraud
• Review information during underwriting
• Help evaluate risk
• Assist with claims processing
• Provide automated customer-service support
• Analyze large amounts of historical data
• Identify potential inconsistencies in applications
• Help insurers better understand emerging risks

The technology can support human decision-making, automate certain repetitive tasks, and make some processes faster.

The NAIC notes that AI is already being used in areas ranging from claims handling and fraud detection to underwriting, pricing, and customer service. (NAIC Content)

How Is AI Being Used in Claims?

One of the areas where consumers may notice AI most directly is the claims process.

Imagine you’re involved in an auto accident and submit photographs of the damage to your insurance company.

AI-powered systems can potentially analyze those images and identify damaged areas, estimate repair costs, compare the damage with historical information, or help determine what additional information may be needed.

That doesn’t necessarily mean a computer is independently deciding whether your claim should be paid.

Instead, AI can help claims professionals process information more efficiently.

This can be especially valuable when insurance companies are dealing with a large number of claims following events such as wildfires, floods, severe storms, or major accidents.

AI and Faster Claims Processing

Traditionally, evaluating a claim could involve multiple steps:

1. A customer reports the claim.
2. Information and documentation are collected.
3. Damage is reviewed.
4. An adjuster evaluates the loss.
5. Repair or replacement costs are researched.
6. Coverage is reviewed.
7. The claim is processed.

AI can assist with portions of this process by quickly analyzing information and identifying patterns.

The goal isn’t necessarily to remove people from the process. Rather, AI can help insurance professionals spend less time on repetitive administrative tasks and more time on situations that require human judgment.

AI and Fraud Detection

Insurance fraud costs the insurance industry and consumers billions of dollars every year.

Artificial intelligence can help insurers identify unusual patterns that may warrant additional investigation.

For example, AI systems can analyze large amounts of claims information and identify similarities between claims that may not be obvious to a human reviewer.

Potential warning signs could include:

• Repeated claims involving similar circumstances
• Unusual patterns in claim timing
• Inconsistent information
• Suspicious billing patterns
• Unusual relationships between claims or accounts
• Images or documentation that appear inconsistent with other information

Importantly, identifying something as unusual does not automatically mean fraud has occurred.

AI can flag information for further review, but additional investigation and human judgment may still be necessary.

How Could AI Affect Insurance Pricing?

This is one of the areas consumers may have the most questions about.

Insurance companies have always relied on data to evaluate risk. AI and machine learning can allow insurers to analyze much larger amounts of information and identify patterns within that data.

For example, AI may be used to support underwriting or pricing models.

The NAIC reports that private passenger auto insurers have reported using or exploring AI and machine-learning models, including applications involving risk scoring and rate-factor analysis. Home insurers have also reported AI/ML use or exploration in areas such as underwriting and renewal evaluations. (NAIC Content)

However, AI does not eliminate insurance regulations.

Insurance companies remain subject to applicable state insurance laws and regulations, including rules concerning fairness, accuracy, discrimination, and consumer protection. The NAIC’s model guidance specifically states that decisions made or supported by AI must comply with applicable insurance laws and regulations. (NAIC Content)

What About Your Privacy?

The increased use of AI also raises an important question:

How much information is being collected and analyzed about consumers?

Insurance companies already work with substantial amounts of information when evaluating policies and claims. AI can make it possible to process and analyze that information much more quickly.

This makes data security and privacy especially important.

Regulators have recognized these concerns. The NAIC identifies potential risks associated with AI, including data vulnerability, inaccuracies, lack of transparency, and unfair discrimination. Its AI guidance emphasizes governance, accountability, and compliance with existing insurance laws. (NAIC Content)

For consumers, this is another reason to understand what information you’re providing and to be cautious when submitting sensitive information through unfamiliar websites, emails, or third-party services.

Could AI Make Insurance More Personalized?

One potential benefit of AI is the ability to make insurance processes more personalized.

Instead of relying solely on broad categories, advanced technology may allow insurers to analyze more detailed information about individual risks.

For example, AI could potentially help identify specific characteristics of a property, vehicle, or claim that deserve additional attention.

In the future, this could contribute to more personalized insurance products and risk-management recommendations.

At the same time, more individualized analysis creates an important responsibility for insurers: the information being used needs to be accurate, relevant, and handled appropriately.

AI Doesn’t Replace the Importance of Your Insurance Agent

With all the discussion surrounding artificial intelligence, you may wonder whether technology will eventually eliminate the need for insurance agents.

For many consumers, the answer comes down to something technology cannot completely replace: personal guidance.

Insurance isn’t simply about purchasing a product.

Your insurance needs can change when you:

• Buy a home
• Purchase a new vehicle
• Start a business
• Get married
• Have children
• Add drivers to your household
• Renovate your home
• Purchase valuable property
• Take on additional financial responsibilities
• Experience a major life change

An insurance professional can help you identify coverage gaps, explain policy options, answer questions, and help you understand what your policy actually does — especially when your situation doesn’t fit neatly into a computer-generated recommendation.

AI may make insurance more efficient, but human expertise remains an important part of the process.

The NAIC similarly notes that AI is more likely to support insurance professionals than completely replace them, with agents, underwriters, actuaries, claims professionals, and customer-service representatives continuing to play important roles in reviewing information and exercising judgment. (NAIC Content)

What Happens If AI Makes a Mistake?

This is one of the most important questions surrounding AI in insurance.

Artificial intelligence can process information incredibly quickly, but it isn’t perfect.

AI systems can potentially produce inaccurate results, rely on incomplete information, or identify patterns that require additional human review.

That’s why regulatory oversight is becoming increasingly important.

The NAIC’s AI framework emphasizes that insurers remain responsible for complying with insurance laws even when AI systems or third-party technologies are involved in decisions. Regulators are also developing tools to evaluate how insurers use AI, including the data going into these systems and the governance and risk-management controls surrounding them. (NAIC Content)

In other words, using AI does not allow an insurer to bypass the rules that already protect consumers.

California and the Future of AI in Insurance

California is also paying attention to the broader risks associated with artificial intelligence and emerging technology.

In June 2026, the California Department of Insurance announced proposed long-term solvency planning regulations addressing emerging risks, including cybersecurity and artificial intelligence. The proposal is part of a broader effort to evaluate how insurers can prepare for technological and environmental risks over the long term. (California Department of Insurance)

This reflects a larger trend across the insurance industry: regulators are trying to understand new technology while making sure innovation doesn’t come at the expense of consumer protections.

As AI continues to develop, regulations and industry practices are likely to continue evolving as well.

What Does AI Mean for You as an Insurance Customer?

You don’t need to understand how an AI model works to make smart insurance decisions.

Instead, focus on the fundamentals.

1. Know What Your Policy Covers

Technology doesn’t change the importance of understanding your coverage.

Know your:

• Liability limits
• Deductibles
• Coverage limits
• Exclusions
• Optional coverages
• Replacement-cost provisions
• Additional living expense coverage, when applicable
• Uninsured/underinsured motorist coverage, when applicable

2. Keep Your Information Accurate

Whether information is reviewed by a person, a computer system, or both, inaccurate information can create problems.

Make sure your insurer has accurate information regarding things such as:

• Your address
• Vehicles and drivers
• Mileage
• Property characteristics
• Business operations
• Home improvements
• Valuable personal property

3. Ask Questions

If you don’t understand why something changed on your policy, ask.

If your premium changes, your coverage changes, or you receive a renewal notice that you don’t understand, an insurance professional can help explain what you’re seeing.

4. Be Careful With Personal Information

Never provide sensitive insurance, financial, or personal information to an unfamiliar website or individual simply because they claim to be using AI or representing an insurance company.

When in doubt, verify who you’re communicating with.

5. Don’t Assume Technology Means “Better Coverage”

AI can make certain processes faster and more efficient, but it doesn’t automatically mean you’re adequately insured.

The most important question remains:

Does your insurance coverage appropriately protect what matters to you?

The Future of Insurance Is Likely to Be a Combination of Technology and People

Artificial intelligence is already changing the insurance industry, and its role will likely continue to expand.

Consumers may experience faster claims processing, more digital services, improved fraud detection, and increasingly sophisticated underwriting tools.

At the same time, AI introduces questions surrounding accuracy, transparency, privacy, fairness, and accountability — issues regulators and insurers will continue to address.

The future of insurance probably isn’t simply people versus technology.

Instead, it is increasingly becoming people working with technology.

AI can process enormous amounts of information quickly. Insurance professionals can provide context, judgment, communication, and personalized guidance.

For consumers, the goal should be to benefit from the convenience of new technology without losing the personal attention and expertise that can be especially valuable when something goes wrong.

How Farrell & Associates Insurance Agency Can Help

Insurance technology may be changing rapidly, but one thing hasn’t changed: having the right coverage still matters.

At Farrell & Associates Insurance Agency, we believe insurance should be more than a policy sitting in a file. It should be coverage you understand and can rely on when you need it.

Whether you’re reviewing your auto, home, business, life, or other insurance needs, our team can help you understand your options and identify areas where your coverage may need to be updated.

Technology may be changing the way insurance works behind the scenes — but having a knowledgeable insurance professional in your corner still matters.

Contact Farrell & Associates Insurance Agency to review your current coverage and make sure your insurance continues to fit your needs.

Frequently Asked Questions

Will AI replace insurance agents?
AI is increasingly being used to support insurance professionals, but agents and other insurance employees continue to play important roles involving judgment, communication, and consumer guidance. The NAIC describes AI as a technology that can support human workers rather than necessarily replace them entirely. (NAIC Content)

Can AI affect my insurance premium?
AI and machine-learning systems can be used in underwriting and pricing by insurers, but insurers must still comply with applicable insurance laws and regulations. (NAIC Content)

Can AI process my insurance claim?
AI can assist with portions of claims handling, including analyzing photographs, identifying patterns, and estimating certain aspects of damage. The extent to which it is used varies by insurer and situation. (NAIC Content)

Is AI in insurance regulated?
Insurance regulators are actively developing guidance and oversight tools for AI. The NAIC adopted a model bulletin in 2023 addressing insurers’ use of AI systems, and its working groups continue developing regulatory tools and frameworks. (NAIC Content)

What should I do if I don’t understand a decision involving my insurance?
Start by asking your insurance company or agent for an explanation. Understanding how a decision affects your coverage, premium, or claim is an important part of being an informed insurance consumer.

Will AI make insurance cheaper?
There isn’t a universal answer. AI may improve efficiency and help insurers process information differently, but insurance premiums depend on many factors, including risk, claims, operating costs, regulations, and the specific insurance market. AI itself does not guarantee lower premiums.

Final Takeaway

Artificial intelligence is no longer a distant concept in insurance. It is already being used throughout the industry, from claims and fraud detection to underwriting, pricing, and customer service.

As the technology continues to develop, consumers should pay attention not only to the convenience AI can provide, but also to questions surrounding accuracy, privacy, transparency, and consumer protection.

And while the technology behind insurance may be changing, the importance of having the right coverage — and someone who can help you understand it — hasn’t changed.

This article is intended for general informational purposes only and does not constitute legal or insurance advice. Insurance coverage, exclusions, limits, deductibles, eligibility, and claim decisions vary by policy and insurance company. California laws and regulations may change. Please review your individual policy and consult a licensed insurance professional for advice regarding your specific circumstances.