As the UK insurance industry heads into 2026, it faces a range of challenges and opportunities. From regulatory pressures to technological advancements, insurers must adapt to stay ahead. Key leaders from EY highlight the importance of modernising data, enhancing resilience, and leveraging AI to drive innovation and growth across life, pensions, and commercial sectors.
UK Life, Pensions & Personal
Alistair Brannan, EY UK Life, Pensions and Personal Lines Leader, comments: “There is a lot at stake for the insurance industry as we head into 2026. Heightened regulatory scrutiny, technology integration complexities, and a challenging market all have the potential to limit insurers’ innovation if they are not equipped to evolve at scale. It will be critical to turn challenges into opportunities – proactively modernising data foundations, pressure-testing resilience strategies, and leveraging AI to enhance value for customers, rather than win an AI adoption race. If firms are successful in these areas in 2026, this could be a year of major progress as they work towards longer-term transformation goals.”
- Elevating insurer resilience
Evolving regulatory frameworks, particularly the PRA’s Dynamic General Insurance Stress Test (DyGIST) in May, post-Consumer Duty expectations, and the continuing rise of cyber threats will all push insurers to pressure-test their resilience strategies. The FCA has also indicated greater focus on the sector following the Which? ‘super-complaint’, with even closer attention now on claims handling and consumer understanding in home and travel cover. Regulatory compliance goes far beyond a baseline expectation now – it is a point of differentiation – and firms must ensure they have coordinated, iron-clad responses in place across risk, product governance and transparency.
- A regulatory reset in pensions
With momentum already behind the FCA’s proposed targeted support rules, and the Pensions Scheme Bill nearing its final stages in Parliament, pension providers are looking at a pivotal year ahead. We will likely see renewed focus on enhancing governance and risk management structures, as well as new, more personalised guidance being offered to long-term savers to address the ongoing advice gap. - Digital transformation and insurtech integration
The integration of emerging technology will accelerate in 2026. For insurers, a major opportunity lies in richer data strategies and the adoption of digital tools to enhance customer experience and help firms keep up with new regulation. Insurtechs are expected to continue playing an important role, offering innovative solutions such as AI-driven underwriting and automated claims processing. Equally, data modernisation – cloud-centric, consolidated platforms – will support insurers’ ability to compliantly provide more personalised advice at relevant touchpoints in the increasingly digital user journey.
UK Commercial/Specialty
Ben Reid, EY UK Commercial & Specialty Insurance Leader, comments: “The UK commercial and specialty insurance market performed strongly in 2025, delivering a robust return on capital, driven by strong underwriting and investment results. However, premium volume growth is slowing, and in a competitive market, firms will need a distinct value proposition, increased focus on cost management, and a sharp focus on innovation to maintain profitability. By exploring new ways to grow, and leaning into tech-driven underwriting opportunities to streamline operations, firms will be well-positioned to meet the demands of an evolving market.”
- Shifting growth strategies
Options for growth in specialty insurance – from M&A to digital trading – are relatively homogeneous. To drive competitive advantage, companies may look to explore more distinct, niche growth plays – for example by doubling down on value from existing investments and evolving their distribution models (including open-market business, MGAs and digital channels) to evolve how products reach brokers and the insured. - Tech-enabled operations
Management expenses remain broadly flat as a proportion of premium, meaning we will likely see a drive for reduced operational costs in 2026. Investment in tech-driven modernisation, and particularly enhanced underwriting, will be critical, allowing companies to scale operations efficiently, improve the experience of trading partners and customers in a softening market, and still manage risk and resilience obligations. - Regulatory evolution
Intensified UK regulatory scrutiny, including new climate stress tests, DORA and non-financial misconduct rules, are all high on the boardroom agenda. Many firms are rightly investing in building capabilities to support readiness and ensure compliance. 2026 will also see industry bodies actively engaging with regulators to ensure oversight remains proportionate and business focused.
