START
Foreword
Introduction
Cost Strategies
Economic Uncertainty
Technology & Data Security
Contributors
Workforce
NEXT
PREV
The 2026 carrier whitepaper brings together insights from insurance leaders across North America and beyond, focusing on the most pressing challenges and opportunities facing carriers today. This report is based on the expertise and perspectives of our contributors and survey participants — thank you for your invaluable input in shaping this year’s publication.
Key Themes Shaping the Industry: Regulatory & Economic Tension: Delays and conservatism in regulatory environments are widening the gap between pricing and risk exposure. Social Inflation & Litigation Severity: Escalating jury awards and third-party litigation funding are driving up liability risks and claim costs. Catastrophic Events: Hurricanes, wildfires, and floods continue to impact claims costs and market stability. Talent & Workforce Challenges: Attracting and retaining skilled talent is now a defining business challenge for carriers. Technological Innovation & Risk: Predictive analytics and generative AI are transforming operations but introducing new vulnerabilities.
Social inflation and regulatory pressures are reshaping liability risk assessment, with North America at the forefront of these changes. The combination of rising jury damages and evolving legal interpretations is forcing carriers to rethink underwriting and claims management strategies. Catastrophic events remain a major concern, driving carriers to advocate for stronger state-backed catastrophe funds and federal disaster programs to ensure long-term market stability. Workforce challenges are intensifying, as the convergence of an aging workforce, talent shortages, and shifting employee expectations creates capability gaps that threaten operational continuity and competitive advantages. Technological innovation not only offers transformative potential but also introduces new risks — especially in fraud and claims use cases. Carriers must balance investment in advanced analytics and AI with robust risk management to maintain stakeholder trust. At Gallagher Bassett, we remain committed to partnering with carriers to optimize performance, improve talent development and retention, and harness emerging technologies to deliver superior outcomes and build long-term resilience.
Kapil Mohan
Chief Client Officer - Risk Managment & Carrier Practice
FOREWORD
KEY FINDINGS
Talent attraction and retention remains the most identified top challenge (18%) for both global and North American carriers. Rising claim-related costs are most heavily felt in underwriting and pricing functions (74%) across North American carriers, followed by claims handling and adjusting (66%). Adoption of generative AI for fraud detection has increased to 67% in North America — a 16-point rise from 2025. Around half of North American respondents report an increase in fraudulent or suspicious claims linked to AI-generated documentation. Over 40% of both global and North American carriers ranked adapting to rapid technology advancements, data and cybersecurity among their top three business challenges.
Introduction.
Adapting to Complexity in a Changing Market
The insurance industry in 2026 stands at a crossroads. Economic pressures, workforce challenges, and accelerating technological transformation are redefining how carriers operate, price risk, and serve clients. Together, these factors are reshaping profitability across lines of business and testing the industry’s ability to sustain growth and innovation. This year’s edition of The Carrier Perspective: 2026 Claims Insights draws on responses from 250 industry leaders across North America, the United Kingdom, and Australia. Traditional insurance carriers made up 72% of respondents, alongside managing general agents (14%) and underwriting agencies (13%), with representation spanning C-suite executives (26%), vice presidents (42%), senior directors (22%), and department heads (11%). The diverse perspectives captured in this year’s study offer balanced insight into the challenges and strategic responses shaping today’s global insurance industry.
56%
North America
24%
United Kingdom
20%
Australia
Respondents
250
Key challenges and shifting priorities
The 2026 survey results reveal a reshaping of carrier priorities. Globally, talent attraction and retention has become the most cited top challenge (18%). This highlights how competition for skilled professionals remains a defining constraint on capacity, innovation, and productivity. Premium affordability and insurability follows closely (17%), underscoring persistent concern over rising claims costs and market accessibility. Adapting to rapid technological advancements ranks third globally (15%) — but its influence extends far beyond its numeric position, shaping nearly every aspect of carrier operations. In North America, talent attraction and retention again leads (18%), while adapting to rapid technology advancements rises to second place (17%), overtaking premium affordability and insurability (16%). This reflects the region’s faster pace of digital adoption and the parallel challenges of integrating new technologies while managing exposure to cyber risk, fraud, and regulatory scrutiny. Across both global and regional perspectives, carriers are balancing the interwoven imperatives of people, technology, and cost.
Four forces shaping the cost and claims environment
At the root of these challenges are four interconnected forces that continue to influence loss ratios, pricing accuracy, and profitability: Legal infraction: The exploitation of legal processes for financial gain through inflated billing and manufactured claims has increased the claims frequency and severity, particularly in liability and workers' compensation. Rising jury damages: The escalation of large jury awards, often driven by social sentiment and litigation funding, is inflating reserves, premiums, and risk aversion across several classes. Third-party litigation funding (TPLF): The external financing of lawsuits continues to prolong litigation timelines and elevate settlement demands, reducing incentives for early resolution. Social inflation: Broader societal and legal trends are compounding claim costs and distorting long-term reserving accuracy, forcing the industry into continual recalibration of underwriting and pricing models.
#1
Attraction and retention of talent
18% of responders ranked attraction and retention of talent as the top challenge facing business today
#2
17% of responders ranked rapid technology advancements as the second top challenge facing business today
Adapting to rapid technology advancements
#3
16% of responders ranked premium affordability and insurability as the third top challenge facing business today
Premium affordability and insurability
North America: Top-Ranked Business Challenges (Snapshot)
NA
Global
Top Business Challenges
Technology transformation and new vulnerabilities
AI is steadily shaping how carriers operate and make decisions — improving efficiency in underwriting, claims management, and fraud detection. Yet this acceleration also introduces new risks, from governance and bias to AI-generated fraud and data privacy threats. Nearly half of global (46%) and North American (48%) respondents ranked adapting to rapid technological change within their top three challenges, reinforcing the urgency for secure, responsible integration. Carriers continue to navigate a delicate balance: leveraging innovation to remain competitive while proactively mitigating the risks it introduces. These internal pressures intersect with persistent external ones — affordability, insurability, and medical cost inflation — that continue to compress margins. To maintain stability, carriers are refining underwriting approaches, applying selective pricing strategies, and using data-driven analytics to strengthen decision-making.
Industry response: adapting through analytics, advocacy, and action
Carriers are responding with a multifaceted strategy. Many are leveraging advanced data analytics and AI to identify emerging loss drivers, flag high-risk jurisdictions, and model potential verdict outcomes. Others are re-evaluating underwriting criteria and pricing models to align more closely with the true cost of risk. In parallel, there is renewed focus on legislative advocacy, particularly around tort reform and promoting transparency in TPLF arrangements. Operationally, automation and AI-driven tools are improving efficiency, freeing professionals to focus on complex, judgment-based decisions where human expertise remains critical. These dynamics show an industry under pressure yet progressing — strengthening operations, investing in people, and applying technology with greater discipline to turn risk into opportunity.
64% of North American carriers have observed an increase in claims complexity over the last 12 months. 58% of carriers in North America cite enhancing risk assessment and modeling as their primary strategy to counter social inflation. AI-driven predictive analytics (76%) and fraud detection technology (71%) are the top two strategies used by North American carriers to manage medical cost trends. 56% of North American carriers say medical inflation is the key contributor to rising claims-related costs.
Cost Strategies.
Redefining Cost Strategies to Rising Claim Complexities and Costs
Rising complexity intensifies cost pressures
North American carriers are facing rising claims complexity, higher payout values, and mounting legal challenges. Claim costs in the region have accelerated faster than global averages, driven by social and medical inflation, as well as litigation pressures that are reshaping underwriting and claims operations. Preliminary global insured losses from natural catastrophes reached USD 105 billion in the first nine months of 2025, marking the sixth consecutive year above USD 100 billion, according to Gallagher Re’s Natural Catastrophe and Climate Report: Q3 2025. The concentration of losses was extraordinary: the five costliest events in January accounted for more than half of global catastrophe losses, with the Los Angeles County fires estimated at USD 40 billion, making it the largest wildfire loss in US history.i Large-scale events like these continue to compound underlying cost pressures, straining claims teams already managing increasingly complex cases and higher payouts. Gallagher Bassett data shows that nearly two-thirds of North American respondents (64%) have seen rising claims complexity in the past 12 months, compared to 65% globally. The impact is most acute in general liability, property, and auto — where loss severity and litigation exposure have accelerated.
Across both North America and global markets, 94% of respondents also cite workforce challenges as a major operational constraint, further slowing claims resolution and increasing administrative burden.
These findings signal a long-term recalibration of cost dynamics, not a short-term fluctuation. Addressing these cost drivers is important for carriers’ financial resilience and for ensuring continued affordability and accessibility for policyholders.
Claims complexity and payout values continue to climb across North America — a structural rather than cyclical shift.
Section 1: Cost Strategies
Observed Shifts in Claims Trends (Past 12 Months)
Claim trends and lines of coverage
Legal pressures, including multimillion dollar verdicts, third-party litigation funding (TPLF), and social inflation continue to drive rising costs and complexity across key lines. Over the past two decades, these forces have steadily increased both the frequency and severity of claims, particularly in litigated bodily injury cases, driving up costs for both carriers and policyholders. General liability and property coverage remain the most affected, identified by 34% and 26% of North American respondents, respectively. Auto liability, especially among managing general agents (MGAs), has also emerged as a critical pain point due to its sensitivity to the inflation of legal and medical costs. In many US states, medical costs per claim rose between 5% and 12% over the past year.ii
According to AM Best, commercial auto liability recorded a significant USD 4.9 billion in losses in 2024 — the 14th consecutive year of underwriting deficits.iii This trend is primarily driven by two escalating factors: the rise of multimillion dollar verdicts and the growing influence of TPLF, which incentivize prolonged and high-stakes legal disputes.
Lines of Coverage With Most Significant Changes in Claims Frequency and/or Severity
Beyond direct medical costs, carriers are also managing secondary impacts: longer recovery periods, extended wage replacement durations, and greater claims complexity when comorbid or psychological conditions are involved. These dynamics are challenging long-standing pricing models and prompting carriers to revisit reserve strategies and provider networks to better manage volatility.
The core drivers of increasing claim costs
Across North America, carriers continue to feel the strain of rising claim-related expenses across their core functions. Survey data shows that underwriting (74%) and claims handling (66%) are the areas most affected, reflecting the combined pressures of inflation, litigation, and operational complexity. These challenges are forcing insurers to reassess how risks are priced, managed, and ultimately resolved. Medical inflation and workforce dynamics Medical inflation remains a primary cost driver across the region. More than half of North American respondents (56%) identify it as the leading contributor to rising claims-related costs, pushing treatment and rehabilitation expenses beyond actuarial expectations. According to the Workers Compensation Research Institute (WCRI), medical expenses account for more than 60% of workers’ compensation costs.iv Aging workers (aged 55+), who now make up a significant portion of the workforce in the US, and the increased focus on mental health further drive up costs.
Medical expenses now account for more than 60% of workers’ compensation costs in the US.
Social inflation and litigation pressures Nearly half of North American respondents (49%) highlight social inflation and litigation pressures as major contributors to escalating claim severity. Anti-corporate sentiment, extensive attorney advertising, and increasing sympathy for plaintiffs have driven up both settlements and litigation duration. This has contributed to an 8% annual increase in auto liability claim severity in the US, far exceeding economic inflation rates.v The expansion of third-party litigation funding has intensified this effect. By channeling external capital into legal proceedings, TPLF increases the scale,
duration, and financial stakes of disputes, often resulting in higher settlements and greater claims volatility. Emerging risks: technology and fraud In parallel, technology-enabled fraud is becoming an additional cost pressure. 42% of North American respondents report that AI and digital tools are being exploited for fraudulent activity, a trend mirrored globally. This underscores the dual nature of technological advancement: while innovation strengthens claims efficiency, it also creates new vulnerabilities.
Take a closer look
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Contribution to Rising Claims Costs
Strategies to manage rising costs
Pricing and risk management Carriers are refining their pricing and underwriting strategies to align more closely with evolving risk realities. The primary strategy, cited by 58% of North American respondents, is enhancing risk assessment and modeling to counter social inflation. More than half are also increasing premium rates (54%), adjusting underwriting appetite (51%), and revising pricing models (51%). Gallagher Bassett analysis shows that dynamic pricing models, often powered by AI, are enabling carriers to align premiums more closely with risk exposure, thereby improving underwriting accuracy and portfolio profitability. Yet cost containment remains a significant challenge. Nearly two-thirds of respondents, both globally and in North America, report that claims are not being settled faster than last year. Of those that are, almost three-quarters say the faster settlements are coming at higher costs. This tension underscores a broader operational paradox: while technology and process improvements are increasing efficiency, the financial burden of settlements continues to rise, eroding much of the benefit gained through speed. Countering medical risk costs Rising medical costs continue to cut across multiple lines — general liability (51%), auto liability (45%), and professional liability (39%). To address this, carriers are investing in prevention, prediction, and early-intervention tools that can detect and mitigate medical cost inflation earlier in the claims lifecycle. According to nearly three-quarters of global and North American carriers, AI-driven predictive analytics and fraud detection technology are the most widely adopted strategies. This data-led approach allows carriers to allocate resources more effectively, target treatment plans earlier, and reduce unnecessary cost escalation.
Pricing and Underwriting Strategies to Manage Social Inflation’s Impact
Some carriers are also exploring Alternative Dispute Resolution (ADR) as a cost-containment tool, although adoption remains modest. Only one-third of North American respondents report using ADR strategies, compared with one-quarter globally. The relatively low uptake reflects the complexity of many claims disputes, which often require judicial procedures or policy clarification that ADR cannot provide.
Looking ahead
Claim-related cost escalation across North America has evolved into a structural reality, driven by the intersecting forces of medical inflation, litigation behavior, and technological disruption. While carriers are deploying increasingly sophisticated cost-management tools, long-term resilience will hinge on their ability to connect predictive analytics, pricing precision, and proactive claims handling into an integrated, data-driven framework. As volatility becomes the norm, the carriers that treat cost management as a strategic capability — not merely a financial control — will be best positioned to protect profitability and policyholder value.
Strengthening cost-control frameworks In addition to automation and AI, carriers are expanding their cost-control frameworks through data-driven benchmarking, care-management partnerships, and enhanced claims oversight. These approaches are helping carriers identify outlier costs earlier, improve treatment outcomes, and manage complex claims more efficiently — reflecting a broader industry shift toward proactive cost containment and accountability.
AI-driven predictive analytics and fraud detection are now standard tools in cost containment
Coverage areas experiencing rising medical costs & Strategies to manage medical cost trends
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Strategies to Manage Medical Cost Trends
Coverage Areas Experiencing Rising Medical Costs
i Gallagher Re. Gallagher Re Natural Catastrophe and Climate Report: Q3 2025. October 15, 2025. https://www.ajg.com/gallagherre/news-and-insights/gallagher-re-natural-catastrophe-and-climate-report-q3-2025/. ii Workers Compensation Research Institute. “Medical Costs per Claim Rose 5–12% Across Majority of States.” October 9, 2025. https://www.wcrinet.org/news/detail/medical-costs-per-claim-rose-512-across-majority-of-states. iii Risk & Insurance. “Commercial Auto Insurance Losses Hit $4.9 Billion as Legal System Abuse Drives Severity Beyond Pricing Gains.” September 22, 2025. https://riskandinsurance.com/commercial-auto-insurance-losses-hit-4-9-billion-as-social-inflation-drives-severity-beyond-pricing-gains/. iv Workers Compensation Research Institute. CompScope™ Medical Benchmarks, 2025 Edition. October 9, 2025. https://www.wcrinet.org/reports/compscope-medical-benchmarks-2025-edition. v Actuarial Review. “Financing Justice: The Rise and Risks of TPLF.” July 16, 2025. https://ar.casact.org/wp-content/uploads/2025/07/AR_July-August_2025.pdf.
Strategies Used to Manage Medical Cost Trends
38% of North American carriers reported increased demand for liability coverage due to trade and tariff pressures. 59% of respondents in North America have shifted their underwriting strategies to manage trade-related cost impacts. Half of carriers globally and in North America have reported changes in the pricing of supply chain coverage due to tariffs. Manufacturing (70%) is the North American industry most affected by tariff-related uncertainty.
Economic Uncertainty.
Economic volatility reshaping underwriting and pricing
Rising economic uncertainty, inflationary cost pressures, and trade-related disruption are forcing carriers to recalibrate how they price and underwrite risk. While premiums must remain affordable for policyholders, escalating exposures — driven by tariffs, supply chain disruption, and regulatory constraints — are narrowing carriers’ operating margins and reshaping market behavior. Recent workers’ compensation premium patterns illustrate how broader economic forces are influencing pricing decisions. Using the latest available data, the net written premium (NWP) for private carriers declined by 3.2% to USD 41.6 billion in 2024. Early 2025 indicators show a further 1.9% decrease in direct written premium (DWP) compared with the first half of 2024. Rate and loss-cost level changes are also projected to reduce premium by approximately 6% in 2025, reflecting shifts in lost-time claim frequency and moderate changes in claim severity. Together, these trends highlight how evolving risk drivers continue to shape premium levels and pricing adequacy.i Catastrophe-related exposures are adding further pressure. According to Verisk’s 2025 Modeled Catastrophe Losses Report, global modeled insured average annual loss (AAL) from natural catastrophes has risen to USD 152 billion, marking a USD 32 billion increase over 2024. The Palisades and Eaton fires in early 2025 caused around USD 65 billion in losses.ii These losses highlight the compounding effects of wildfires, extreme weather, urbanization, and economic interdependence. Carriers in key markets are also facing stricter oversight and evolving trade policies that influence underwriting appetite, pricing, and coverage terms. As the global economy adjusts to evolving trade dynamics and tariff uncertainty, carriers are moving toward more adaptive risk models and dynamic pricing frameworks to maintain both profitability and coverage availability.
Economic and Trade Pressures Reshaping Carrier Strategy
Section 2: Economic Uncertainty
Trade and tariff impacts: shifting demand and response
The changing trade landscape has led to mixed impacts on insurance demand in North America. While 38% of carriers report increased demand for liability coverage linked to tariffs, just over half indicate demand has remained stable — reflecting the uneven distribution of tariff exposure across industries.
General liability has seen a marked rise in claim frequency and severity, prompting many businesses to expand coverage against trade-driven risks such as supply chain interruptions and contract disputes. To manage trade-related cost impacts, carriers have adopted several approaches: Revised underwriting strategies: Around 60% globally (59% North America) adjusted underwriting criteria to account for trade-related risks. Adjusting coverage terms: 56% globally (51% North America) modified policy wording or limits to better align with new exposures. Coverage adjustments appear slightly more common globally, suggesting regional variation in how carriers are managing tariff-linked pressures and regulatory flexibility. Premium increases: 44% globally (40% North America) raised premiums to offset rising exposure. No major actions: 23% of North American carriers reported no significant action, 6 percentage points above the global average – reflecting regional regulatory constraints and market competition.
These adjustments mirror wider market patterns. According to PwC and BCG, higher tariffs on imported materials such as steel, aluminum, and auto parts have inflated repair and replacement costs, directly increasing claims severity in auto and property lines.iii
Increased Demand for Liability Coverage
Strategic Responses to Trade-Related Cost Impacts
Strategic responses to ongoing turbulence
In response, carriers are broadening their strategies — strengthening underwriting control while diversifying across products and markets to manage ongoing volatility. Nearly six in ten carriers, both globally and in North America, have reinforced underwriting standards to manage exposure to economic instability. Beyond underwriting modifications, more than one in three North American respondents (36%) are diversifying their product mix to better align with emerging market demands and evolving customer needs. A similar proportion are also targeting new industries, expanding into growth areas that are less exposed to trade or tariff-related pressures. Tariff-driven supply chain shifts are also creating opportunities in reshoring and domestic manufacturing, where carriers are developing new coverage options across inland marine, commercial property, and liability lines. Expansion into new geographic regions continues to serve as a hedge against concentrated exposure in tariff-sensitive markets. Alongside these moves, carriers are introducing pricing flexibility, including parametric insurance, enabling more tailored and responsive customer solutions while maintaining affordability.
Policy and Sales Strategy Changes Due to Economic Uncertainty
Nearly six in ten carriers have tightened underwriting standards to manage sustained volatility.
Industry and supply chain effects
Tariff-driven rerouting and longer transit times are increasing complexity in marine and logistics claims, including damage and loss, as well as spoilage of perishable goods.
Almost half of all carriers globally, and in North America, report changes to supply chain coverage pricing and underwriting. Manufacturing has been the most affected sector, with nearly three-quarters of both North American (70%) and global (71%) carriers identifying it as highly vulnerable to tariff-related impacts. Similarly, the shipping and logistics sector follows at 63%, reflecting its sensitivity to customs delays, port backlogs, and fuel price fluctuations. Construction and retail have also felt notable effects (about 50%), while hospitality and food services remain comparatively insulated at 14%. Insights from W K Webster, a Gallagher Bassett company specializing in marine and transit claims, indicate that recent tariff shifts have changed claim patterns in marine and logistics lines — including longer transit times, higher shipping costs, and greater exposure to loss or damage. As cargo is rerouted to avoid elevated duties, claims have become more complex, often requiring deeper forensic analysis of documentation and liability. This trend is particularly evident in the region’s agricultural sector, where reciprocal tariffs have forced rapid supply-chain pivots and rerouting of exports to alternative markets.
These operational and trade shifts are cascading into the broader claims environment, contributing to higher repair and replacement costs, more intricate documentation requirements, and prolonged liability disputes. During periods of market strain, smaller claims are pursued more aggressively, as companies seek to offset tightening margins. Across property and casualty lines, tariff-linked inflation in material and labor costs continue to elevate loss severity, while fraud risk and longer claim-resolution times are compounding operational pressures for carriers already managing workforce and cost constraints.
Industries Most Impacted by Trade-Related Uncertainty
Industries Most Impacted by Tariff-Related Uncertainty
Regulatory pressure and affordability
The rising cost of claims and increasing regulatory pressures are posing significant challenges for commercial lines carriers globally. Where regulations are particularly restrictive, this can lead to reducing capacity, forcing market exits, and leading to underinsurance for businesses. At the same time, allowing unchecked premium increases risks making essential coverage unaffordable for commercial enterprises. To balance these competing pressures, the insurance industry is advancing several strategies aligned with the wider move toward risk diversification and resilience: Parametric insurance solutions: Faster payouts and lower administrative costs through predefined triggers Climate-resilient investments: Strengthening infrastructure and mitigation to curb long-term loss costs Government-backed reinsurance programs: Collaborative risk-pooling to sustain capacity in catastrophe-prone markets Dynamic pricing models: Leveraging advanced analytics to align premiums more accurately with risk Regulatory collaboration: Promoting flexible frameworks and public–private partnerships that uphold affordability and access Together, these efforts mark a shift from reactive cost management toward proactive risk design — where data, technology, and regulatory collaboration underpin long-term stability.
Trade volatility, regulatory complexity, and inflationary pressures will continue to shape carrier strategy in the year ahead. Those that combine data-led underwriting, dynamic pricing, and disciplined risk management will be best placed to maintain both financial resilience and customer confidence.
Future outlook
i Sullivan, Samantha, Kevin Fernes, Zachary Matson, and Vanessa Polidoro. “2025 in Sight, 2024 in Review: The Latest Results for Workers Compensation.” October 8, 2025. https://www.ncci.com/Articles/Pages/Insights-2025-in-Sight-2024-in-Review.aspx. ii Verisk. “Average Annual Losses from Natural Catastrophes.” September 2, 2025. https://www.verisk.com/company/newsroom/$152-billion-and-rising-new-report-shows-insurance-industry-facing-growing-average-annual-losses-from-natural-catastrophes/. iii Takabe, Yohei, Micah Jindal, Nadine Moore, Paul Nelson, Joe Khoury, Nathalia Bellizia, Sara Codella, and Elton Parker. “For US Insurers, Tariffs Create Risks and Opportunities.” May 14, 2025. https://www.bcg.com/publications/2025/tariff-implications-for-us-insurance-sector.
Fraud detection is now the leading use case for generative AI in North America, with deployment rising 16 percentage points since 2025. More than seven in ten North American carriers plan to expand AI-enabled fraud detection over the next 12-18 months. Encryption usage as a data security measure increased sharply from 51% to 80% globally; three-quarters of North American carriers now use it. 54% of North American carriers report an increase in customer-generated AI documentation, such as letters and invoices. Hybrid AI models dominate fraud detection use cases in North America (55%), while only 32% rely solely on in-house models.
Technology and Data Security.
Generative AI adoption accelerates — with fraud detection leading growth
Section 3: Technology and Data Security
Generative AI Accelerates Fraud Detection and Heightens Data Security
Global usage patterns remain similar to 2025, though fraud detection recorded the largest increase (9 percentage points). Customer communication and support declined by 7 percentage points, reflecting a shift toward operational integrity and risk mitigation. North America, however, is advancing faster. Deployment of generative AI for fraud detection increased 16 percentage points, overtaking claims intake and triage as the region’s top use case. Planned adoption is also stronger: more than 70% of North American carriers intend to expand generative AI investments in fraud detection over the next 12-18 months. Carriers adopting AI more broadly across document analysis, anomaly detection, and triage processes report notable efficiency improvements while preserving accuracy — signalling a meaningful shift in how AI is supporting the end-to-end claims lifecycle.
AI has moved from experimentation into full operational use across the insurance industry. Carriers are now increasingly embedding generative AI across multiple stages of the claims lifecycle — including intake, triage, document intelligence, assessment support, and resolution — reflecting a broader shift toward AI-enabled workflows. Within this expanding set of applications, fraud detection has emerged as the most advanced and fastest-scaling capability, driven by rising claim complexity and increasing volumes of AI-generated documentation. Across the industry, carriers are moving quickly to strengthen this part of the workflow. Gallagher Bassett’s market observations show that the largest gains occur where generative AI supports both fraud mitigation and upstream review processes — enabling faster triage, more targeted investigation, and greater consistency in documentation analysis. These capabilities align with what many in the industry are actively prioritizing: accuracy, efficiency, and the ability to respond quickly to emerging fraud patterns amplified by AI tools. Global adoption grew modestly (+2%) year-on-year; but integration within the claims lifecycle continues to deepen. More than two-thirds of global carriers (68%) and 63% of carriers in North America already use generative AI in claims resolution. These tools automate previously manual, time-intensive tasks — summarizing complex claim files, extracting insights, and validating documentation — improving accuracy while accelerating resolution times. Gallagher Bassett’s survey findings show that fraud detection remains the leading generative AI use case for carriers. According to McKinsey, applying AI-driven technologies across the claims lifecycle could reduce fraudulent claims and save between USD80 billion and USD160 billion by 2032.i
Overcoming barriers to widespread AI implementation
While adoption continues to expand, carriers face several structural challenges: Regulatory and compliance pressures 54% of North American carriers cite regulatory risk as a top barrier, with evolving frameworks, such as the California Consumer Privacy Act (CCPA),ii requiring heightened governance and oversight. Accuracy, trust, and model reliability 53% of North American carriers cite concerns around AI accuracy, prompting rigorous verification processes before outputs reach customer-facing channels. Skills and talent gaps Half of North American carriers — and more than half globally — report that workforce capability gaps are slowing broader AI adoption Verification as a safeguard 69% of North American and 70% of global carriers rely on in-house validation teams; approximately one in four use external vendor verification. This multi-layered oversight is increasingly viewed as essential to mitigate the risks of AI hallucinations (inaccurate outputs) and data breaches, ensure compliance, and protect customer trust.
Current vs. Future Usage of Generative AI in Claims Lifecycle
The rising threat of AI-generated fraud
AI-generated fraud is escalating rapidly. Tools such as ChatGPT and document/image generators are enabling highly convincing forged documents at scale, increasing both the volume and sophistication of suspicious claims. North American carriers are seeing this shift sharply: 54% report notable increases in customer-generated AI content. 48% report a rise in fraudulent or suspicious claims linked to AI-generated documentation. Global trends mirror this pattern, reinforcing that this is a widespread, structural challenge. Carriers are responding with accelerated investment in advanced fraud detection and model retraining. Board-level visibility has also increased, with AI-related fraud risk no longer treated as a technical issue but as a material enterprise-level exposure. In North America, more than half of all those surveyed report implementing new AI fraud detection tools and updating or retraining existing fraud detection models. North America shows a distinct preference for external expertise and hybrid deployment models: 56% use vendor or hybrid models, while only 32% rely solely on in-house systems. This reflects a focus on rapid deployment and specialized capability rather than full proprietary model development.
AI Model Source for Fraud or Claims Use Cases
Carriers double down on data security infrastructure
Data security has evolved into a fundamental part of insurance operations, altering how carriers assess risk and deliver services. Over the past decade, the proliferation of digital technologies has led to an exponential increase in the volume of sensitive data that carriers handle, including personal, financial, and health information. This has made the industry a prime target for cyberattacks, with ransomware, phishing, and data breaches becoming increasingly prevalent threats. North American carriers have responded with significant investment in security controls. Encryption usage has risen sharply, with 76% of North American carriers relying on encryption and 74% implementing structured data audits — representing one of the largest year-on-year increases in security adoption globally. As reliance on AI increases, carriers are also strengthening privacy governance frameworks and expanding cyber liability coverage in response to heightened risk across both consumer and commercial segments.
Top 5 Measures Taken to Address Data Security & Privacy Concerns
Building resilience through responsible AI adoption
The long-term role of generative AI in the insurance sector will be shaped by carriers’ ability to adopt it responsibly. The survey findings show that while AI is unlocking meaningful advancements in fraud detection and claims processing, sustainable progress depends on three core enablers: Regulatory compliance readiness Rigorous accuracy and validation processes Workforce capability and AI literacy Carriers strengthening these foundations — while simultaneously investing in cybersecurity and hybrid AI architecture — are positioning themselves to scale AI with confidence. Those pairing responsible AI adoption with strong operational disciplines are already seeing faster decision cycles, improved document-handling accuracy, and more consistent claims outcomes. Together, these practices reinforce AI’s role as a driver of long-term operational resilience, stronger customer experience, and improved loss management.
i Kamalapurkar, Kedar, Namrata Sharma, and Michelle Canaan. “Property and Casualty Carriers Can Win the Fight Against Insurance Fraud.” April 24, 2025. https://www.deloitte.com/us/en/insights/industry/financial-services/financial-services-industry-predictions/2025/ai-to-fight-insurance-fraud.html. ii State of California Department of Justice. “California Consumer Privacy Act (CCPA).” March 13, 2024. https://oag.ca.gov/privacy/ccpa.
39% of carriers globally have adjusted their pricing models to reflect risk changes linked to remote work. Talent attraction and retention has become the top challenge globally, rising from seventh place in 2025. Investment in training and development is the leading retention strategy, prioritized by 58% of North American carriers. The most critical labor shortages are in claims management, specialized case management, and legal/compliance functions. Hybrid work models (1-3 days per week in office) are viewed by 57% of North American carriers as most effective for talent attraction and retention. Proactive health and safety measures, including telemedicine, are improving engagement and productivity among older workforce segments.
Workforce.
The shift in labor market trends
North American carriers are experiencing sustained pressure in attracting and retaining skilled talent, with workforce concerns rising sharply to become the most frequently cited top challenge in 2026. More than two-thirds of respondents globally (68%) report increasing difficulty finding qualified candidates, and North American carriers reflect similar sentiments. This marks a dramatic shift from 2025, when workforce concerns ranked seventh globally — signaling that competition for qualified professionals has reached unprecedented levels. Underlying demand for job growth and wage increases continue to strain carrier operations.i In response, carriers are rebalancing their retention strategies, shifting from short-term incentives toward sustainable investment in skills and development. Investment in training and development is now the dominant approach, prioritized by 60% of global and 58% of North American carriers — a notable increase from 43% in 2025. Compensation-related strategies have also strengthened. Offering higher wages or bonuses has risen to 52% globally (51% North America), now ranking as the second most common retention lever. Nearly half of carriers globally and in North America are also enhancing employee benefits, reflecting broader expectations around well-being and support. By contrast, flexible work arrangements have seen reduced emphasis. These were adopted by 61% of North American respondents in 2025, but globally the share has declined from 58% in 2025 to 42% in 2026, suggesting that flexibility has largely been normalized rather than deprioritized. At the same time, carriers continue to grapple with the compounding effect of rising claims costs and medical inflation. In North America, 59% of carriers report moderate to significant impact on their ability to manage claims effectively, driven by medical inflation, increasing claim severity, and operational inefficiencies.
Section 4: Workforce
The Workforce Challenge: Talent, Capability, and Change
Across industries, mental health is increasingly recognized as a core component of overall workforce well-being, influencing global healthcare priorities and workplace strategies.
Top Strategies for Retaining Employees
Critical labor shortages across key areas
Claims management and adjusting continue to face the most acute labor shortages, cited by more than half of respondents globally and in North America. Specialized or skilled case management — including medical, injury and nurse case management — follows closely, with half of global carriers and 46% of North American respondents reporting shortages. Legal and compliance roles show a similar pattern, with shortages more pronounced globally (24%) than in North America (19%).
These shortages stem from multiple converging factors: An aging and retiring workforce Increasing job demands from the growing complexity of cases A widening skills gap accelerated by emerging technologies Significant global disparity in knowledge and expertise exists in legal and compliance functions. This is due to lower skill levels and a limited pool of experienced professionals.
Labor shortages are most acute in claims and specialized case management.
Globally, more than half of carriers cite skills and talent gaps as one of the top three barriers to broader Gen AI adoption in claims and fraud processes. In the US, the skills gap currently costs the economy USD 1.1 trillion per year, roughly 5% of GDP — underscoring how labor constraints directly affect operational performance.ii
Areas Facing the Most Significant Labor Shortages
Remote and hybrid work reshaping workforce structures
In 2025, approximately 32.6 million Americans, roughly 22% of the US workforce, were working remotely — a substantial increase from pre-pandemic levels and a clear indication of a lasting shift in work culture.iii Yet only 11% of North American carriers believe that fully remote arrangements positively impact their ability to attract and retain top talent. Hybrid work models (one to three days per week in office) have instead emerged as the preferred structure, supported by 61% of global carriers and 57% in North America. This model provides flexibility while preserving collaboration, culture, and development pathways. To support hybrid teams, carriers have invested in secure digital tools, flexible working policies, and structured hybrid frameworks. This shift is also influencing pricing and premium assessments: 39% of global respondents report changes to pricing models linked to remote work, compared with 29% of North American carriers. Workers’ compensation trends also reflect this shift, with lower exposure to traditional workplace injuries and the potential for reduced property-based risk in commercial settings. Notably, 14% of North American carriers report that although they have not made any pricing adjustments yet, this may be required soon.
Changes in Workers' Compensation Pricing Models for Remote Work
The implications of an aging workforce
Evolving retirement patterns and a declining youth labor force are shifting workforce demographics significantly. Increased longevity and financial pressures mean that employees are working longer, which is fundamentally shifting workforce demographics toward older age groups. Workers aged 55 and older are projected to comprise over 25% of the workforce by 2031.iv
Workers aged 55+ will account for over 25% of the workforce by 2031 — a demographic shift reshaping training, capability planning, and workplace health strategies.
This demographic shift requires targeted investment in workplace health and safety, as well as tailored benefits and appropriate wellness programs. Telemedicine, wearable health devices, and AI-enabled diagnostics are increasingly relevant in supporting early detection and managing chronic conditions. Retaining experienced employees also offers meaningful strategic advantages, including institutional knowledge, higher decision quality and stronger continuity. Supporting this segment of the workforce can materially influence operational performance and drive long-term success.
GB's Workers' Compensation Claim Distribution vs. Proportion of the US Labor Force by Age
Actionable strategies to address workforce challenges
A third of North American carriers cite labor shortages or lack of expertise as contributors to rising claim costs. Gallagher Bassett’s observations show that organizations responding effectively are: Investing in meaningful training beyond compliance requirements Embedding targeted risk-control and ergonomics guidance for hybrid teams Aligning wellness, mental health, and safety programs to workforce needs Strengthening career pathways to mitigate capability loss as experienced workers retire Carriers that adopt a more holistic, capability-focused approach are better positioned to stabilize costs, strengthen operational resilience, and retain the talent needed to meet increasing complexity across claims and underwriting.
i MRINetwork. “BLS Employment Situation Report: September 2024.” October 4, 2024. https://mrinetwork.com/world-of-work/bls-employment-situation-report-september-2024/. ii Pearson. “$1.1 Trillion at Stake: Pearson Report Urges Action, Solutions for Skills Gap.” January 22, 2025. https://plc.pearson.com/en-GB/news-and-insights/news/11-trillion-stake-pearson-report-urges-action-solutions-skills-gap. iii Neat. “The State of Remote Work: 2025 Statistics.” May 13, 2025. https://us.neat.no/resources/the-state-of-remote-work-2025-statistics/. iv Schwedel, Andrew. “3 Ways Organizations Can Empower Older Workers amid an Ageing Global Workforce.” September 13, 2024. https://www.weforum.org/stories/2023/09/how-organizations-can-embrace-older-workers-amid-an-ageing-workforce/.
Caryn Siebert
Chief Client Officer, Risk Management and Carrier Practice
Senior Vice President, Carrier Practice Sales
Jon Stambaugh
Vice President, National Director, Carrier Engagement
Kapil Mohan oversees Client Services for Gallagher Bassett's Risk Management and Carrier segments, focusing on strategic program development, service delivery, and relationship management. He leads innovation and service excellence initiatives, driving advancements in stewardship/KPI reporting, AI-based decision support, and medical management. Under his leadership, Gallagher Bassett has enhanced its capabilities related to program performance measurement, demonstrating results, and client service. Before Gallagher Bassett, Kapil served as an associate partner with Bain's Chicago office with a focus on customer growth strategy, cost-reduction, business transformation, post-merger integration, and organizational design. He holds a Master of Science in industrial engineering and operations from the University of Wisconsin, Madison, and a Master of Business Administration in strategy, finance, and economics from the University of Chicago Booth School of Business.
VP — National Director, Carrier Engagement
Caryn Siebert focuses on business development and strategic initiatives at Gallagher Bassett. With over 25 years of expertise in claims, legal, risk management, and process improvement, Caryn has held executive roles such as CEO, Chief Claims Officer, and General Counsel. She actively contributes to industry events, organizations, and mentoring initiatives. Caryn is actively involved in strategic initiatives and business development for the national P&C carrier marketplace and public entity/risk management, focusing on various insurance products and risk mitigation. Most recently, in recognition of her significant contributions, the CLM honored Caryn with the 2024 Lifetime Achievement Award and Insurance Business America inducted her into their esteemed Hall of Fame.
Jon Stambaugh has been with Gallagher Bassett since 2013 and is the Senior Vice President of the Carrier Practice. In this role, he engages at the executive level for new accounts, collaborating with leadership on strategic business opportunities. Jon oversees Gallagher Bassett's national carrier sales team and sets the strategic direction for the business segment. Before Gallagher Bassett, he worked with Lockton Companies, General Electric, and EY. Jon holds a Bachelor of Business Administration in Finance & Accounting degree from the University of Iowa. He also completed Executive Education at Kellogg School of Business, Maximizing Sales Force Performance from Northwestern University, and has several industry certifications, including CPCU and Certified Green Belt in GE Six Sigma Process Improvement Methodology.
Senior Vice President, Consultative Analytics
Dan Link
Daniel Link joined Gallagher Bassett in 2016. He leads the sales and marketing analytics team for the risk management and carrier segments. With over 20 years of experience, his role includes business development, broker relations, client stewardship, managed care analytics, and internal management reporting. Before Gallagher Bassett, Dan worked at CNA Financial Insurance as a Consulting Director for Underwriting Strategy from 2015 to 2016 and at Zurich Financial Services as the Director of Manufacturing and Practice Leader for the US from 2014 to 2015. He holds a master’s degree from Loyola Quinlan School of Business and a CPCU designation from Michigan State University.
Director, Consultative Analytics
Emily Day
Emily Day joined Gallagher Bassett in 2017. In her current role, Emily oversees analytics for Gallagher Bassett’s largest carrier partnership, driving program stewardship to deliver exceptional results for both clients and the firm. Emily has been instrumental in launching Stewardship 4.0 for US clients and facilitating the transition of our largest carrier partnership into the Gallagher Bassett analytic system. She has held various roles, including analytic strategy and client-focused analytics, especially within managed care analytics and client stewardship. Emily holds a Bachelor of Science in Business Analytics and Politics from Loras College.
Assistant Vice President, Consultative Analytics
Jessy Watson
Jessy Watson joined Gallagher Bassett in 2022. She leads the Sales and Marketing Analytics team, providing analysis for prospective clients, new client analysis, and industry publications. Jessy is also a core team member of Gallagher Bassett’s award-winning IN2GB Rotational Internship Program. She has held roles across marketing agencies, catastrophe analytics for personal lines carriers, and various insurance analytics functions. Jessy has also served as the President of the Pikes Peak CPCU Chapter, contributed to national interest groups for the CPCU Society, and taught CPCU courses to insurance professionals. She holds a master’s degree in government and public administration and an MBA with an emphasis in IT project management.
Senior Vice President, Carrier Practice Strategy & Go-To-Market
Sean Willett
Senior Vice President – Carrier Practice Strategy & Go-To-Market
Sean Willett leads our Carrier sales and business development efforts, as well as spearhead the advancement of our Carrier product offering. He previously led Gallagher Bassett’s Strategic Initiatives team responsible for identifying, prioritizing, and executing the company's most important efforts across North America after joining in 2022. Earlier in his career, Sean served as Director of Strategy at KPMG U.S., where he served as a leader in the Insurance Strategy advisory practice in charge of building new solutions, generating new business, and leading numerous client engagements. Prior to this role, he worked at Allstate, where he focused on customer data and analytics. He was responsible for the delivery of Allstate's Customer Data Strategy program: a multi-year, multimillion-dollar program to lay the technology foundation to better understand and serve customers across their insurance journeys. He holds a Bachelor of Science in Business from the University of Illinois and a Graduate Certification in Financial Decision-Making from the University of Chicago. Mr. Willett also serves as Board Treasurer for The Harbour, Inc., a Chicago nonprofit that provides emergency shelter and transitional housing for homeless youth.
CONTRIBUTORS
Daniel Link
Caryn Siebert focuses on business development and strategic initiatives at Gallagher Bassett. With over 21 years of expertise in claims, legal, risk management, and process improvement, Caryn has held executive roles such as CEO, Chief Claims Officer, and General Counsel. She actively contributes to industry events, organizations, and mentoring initiatives. Caryn is based in Orange County, CA, and is actively involved in strategic initiatives and business development for the national P&C carrier marketplace and public entity/risk management, focusing on various insurance products and risk mitigation. She mentors students at Fowler School of Law (Chapman University) and conducts mock interviews at Cal State Fullerton — School of Insurance.
Sheharyar Quadri
Russell Lindberg
Director, Consultative Analytics, Client Technologies
Senior Associate, Strategic Insights
Timothy Maj
Sheharyar Quadri joined Gallagher Bassett in September 2024 as AVP of Consultative Analytics, leading the Carrier and Captive Analytics team. In this role, Sheharyar has transformed the captive claim review process by leveraging advanced data and analytics to reduce review volume and improve claim selection criteria. He began his career at Liberty Mutual Insurance through the Advanced College Hire rotation program, gaining experience as an adjuster before transitioning to the Data Science team. Sheharyar later held analytics roles at CNA Insurance and GE, generating insights into key business areas. He then joined Synchrony, where he managed analytics for its largest client and advanced to AVP of Consumer Bank Analytics, focusing on marketing and digital analytics. Sheharyar holds a Bachelor of Business Administration in Finance and Marketing from Loyola University Chicago and a Master of Science in Information Systems from Northwestern University.
Russell Lindberg joined Gallagher Bassett in 2004. In his current role, Russell focuses on delivering demos and presentations of Gallagher Bassett products, including Luminos and Gen AI offerings. He also oversees client analytics and reporting. During his tenure at Gallagher Bassett, Russell has managed the product development and production support of Gallagher Bassett’s web intake platform and document management application. Prior to Gallagher Bassett, he served as Director of Marketing for a medical startup specialising in haemodialysis. Russell’s key areas of expertise include claims intake, Gen AI and client-facing technology. He holds a Bachelor of Science in Public Health and Chemistry.
Timothy Maj joined Gallagher Bassett in February 2023. In his role, Timothy focuses on delivering high-quality ad-hoc reporting and model design to support client needs. Before joining Gallagher Bassett, Timothy worked as a Senior Strategy Analyst at Arch Mortgage Insurance, where he provided intelligence and insights to support product and pricing teams. His key areas of expertise include analytics and SQL. Timothy holds a Bachelor of Arts in Economics (2005) and a Master of Arts in Applied Economics (2007), both from the University of North Carolina at Greensboro.
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The themes explored in The Carrier Perspective: 2026 Claims Insights reflect real shifts we are seeing across the insurance industry globally. Cost pressure, workforce constraints, economic uncertainty, and technology and data risks are no longer addressed in isolation.
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