Forrester Predicts Insurance Industry Shifts In 2027
Forrester forecasts significant changes in the insurance industry, including increased adoption of parametric coverage and AI-powered customer experiences. These shifts may impact how insurers operate and interact with customers.
Original reporting · forrester.com
Original: “Predictions 2027: New Products Will Fill Gaps As AI Reshapes Insurance”
Read “Predictions 2027: New Products Will Fill Gaps As AI Reshapes Insurance” at Forrester →
How this was written. Message Verified wrote this article with a language model from Forrester’s reporting (model: @cf/meta/llama-3.3-70b-instruct-fp8-fast); it describes that reporting rather than adding to it. The original, linked above, is the full story.
Key points from Forrester’s report
- Parametric coverage may become more mainstream in 2027, offering faster payouts and filling gaps in traditional catastrophe coverage.
- Insurers may launch new products focused on longevity to address changing consumer needs.
- The use of agentic AI in customer experience is expected to increase, but most carriers may maintain human oversight for key decisions.
- Insurance leaders will need to develop a clear strategy for investing in new technologies and products.
- Discipline and accountability will be crucial for separating experimentation from progress in the insurance industry.
The insurance industry is expected to undergo notable changes in 2027, according to Forrester. One key trend may be the growing use of parametric insurance to fill gaps in traditional catastrophe coverage. This type of coverage can provide faster payouts, which may become more appealing to customers.
Forrester reported that companies are increasingly using parametric insurance alongside traditional property programs. This shift may be driven by reduced rates and faster payouts, making it a more attractive option for customers. As a result, brokers may quote parametric coverage more frequently, forcing incumbent insurers to adapt.
Insurers may also respond to changing consumer needs by launching new products focused on longevity. As people live longer, they may require more comprehensive financial planning and protection. Forrester found that many consumers consider their increased lifespan when planning for the future, and insurers may develop products to address these concerns.
The use of agentic AI in customer experience is another area where insurers may see significant changes. Some leading insurers already use AI to analyze information and generate recommendations, and this trend may continue in 2027. However, most carriers may stop short of allowing unsupervised AI agents to make key decisions, such as binding or declining coverage.
To succeed in this changing landscape, insurance leaders will need to develop a clear strategy for investing in new technologies and products. This may involve evaluating which customer problems deserve investment and which technologies are ready for operational use. Forrester emphasizes the importance of discipline and accountability in separating experimentation from progress.
As insurers move forward with new initiatives, they will need to balance the need for speed with the need for caution. This may involve setting limits on the use of AI and ensuring that employees understand when to rely on automated support and when to intervene. By taking a thoughtful and disciplined approach, insurers can position themselves for success in 2027.
Forrester clients can access more detailed information on these predictions, including two bonus predictions, by reading the full Predictions 2027: Insurance report. Non-clients can also access complimentary resources, including webinars and guides, to stay up-to-date on the latest industry trends.
Questions and answers
What is parametric coverage?
Parametric coverage is a type of insurance that provides faster payouts based on predetermined parameters, such as the severity of a natural disaster.
How will insurers use agentic AI in 2027?
Insurers may use agentic AI to analyze information, generate recommendations, and improve customer experience, but most will maintain human oversight for key decisions.
What do insurance leaders need to succeed in 2027?
Insurance leaders will need to develop a clear strategy for investing in new technologies and products, and balance the need for speed with the need for caution and discipline.
