41.6% AI Adoption, Tech-Led Broker M&A, and a $300B Macro Warning

Good morning, ! This week we’re unpacking why automated underwriting now leads AI adoption across insurance (41.6%), how fraud detection and risk management are close behind (~39%), why portfolio reshaping is being driven by capital efficiency (31% at the C-suite), and how rising macro tail risk could trigger up to $300B in forced Treasury sales under stress scenarios.

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TREND OF THE WEEK

Premium Growth Goes Selective

Premiums are still rising, but the broad-based expansion of past cycles is over. According to Deloitte’s 2026 Global Insurance Outlook, insurers are tightening their focus, trading growth-at-all-costs for a more disciplined, capital-efficient strategy. Non-life premium growth is being driven almost entirely by price hikes—not volume—as reinsurers retreat from CAT-heavy zones and primary carriers reprice risk across commercial lines. Life insurance tells a more volatile story: strong gains in 2024 give way to flat or negative growth in 2025 across most regions, with only modest recovery by 2026.

The common thread is margin. Insurers are shedding unprofitable books, narrowing product portfolios, and turning to AI and modular platforms to make every new dollar of premium count. Growth is being redefined—not as expansion, but as return. APAC continues to outperform in digital-driven segments, while North America sees growth concentrated in select P&C lines. EMEA remains balanced but cautious. For FIG executives, the takeaway is strategic: premium growth is now a signal of underwriting precision, not just scale. Watch where it accelerates—and where it disappears. (More)

MICROSURVEY

Portfolio Reshaping Shifts from Strategy to Discipline

Our latest survey (N = 244) indicates that portfolio reshaping is increasingly driven by capital efficiency and risk control, rather than pure growth ambition. At the aggregate level, risk reduction and volatility management leads at 25%, followed by regulatory and solvency pressure and strategic refocus at 20% each, underscoring the multiple forces acting on insurers simultaneously.

Senior leadership shows a sharper focus. In the C suite, capital efficiency and ROE optimization is the top driver at 31%, rising to 35% among directors, the highest single data point in the results. This signals that portfolio decisions are being used deliberately to improve returns and simplify capital allocation. Further down the organization, priorities shift toward execution. Partners cite risk reduction as the leading driver at 32%, reflecting proximity to volatility and portfolio performance. Vice presidents show a more balanced view, with risk reduction and investor pressure both at 22%.

Overall, portfolio reshaping is evolving into a disciplined performance lever. Capital sets the direction, while risk management increasingly shapes how change is executed. (More)

DEAL OF THE WEEK

WTW Buys Newfront to Accelerate Middle Market and Tech Strategy

WTW has completed its acquisition of Newfront, adding a top forty U.S. broker that was built for modern advisory work rather than legacy placement economics. This is a capability deal, not a vanity grab. Newfront’s platform blends automation, agentic AI, and proprietary client tools that allow advisors to move faster, cover more ground, and stay embedded with high growth clients across technology, fintech, and life sciences. For WTW, that translates into sharper execution in the U.S. middle market, where advisory intensity matters more than global scale alone.

The real asset is the advisor layer. Newfront’s producer base was designed around tech enabled servicing and industry specialization. Plugged into WTW’s global analytics, specialty expertise, and distribution, those advisors gain leverage without losing speed. Folding Business Insurance and Total Rewards into Risk and Broking and Health, Wealth and Career strengthens cross functional advice at the client level.

Advisors on both sides of the table mattered here. J.P. Morgan and Weil, Gotshal and Manges advised WTW, while Perella Weinberg and Reed Smith represented Newfront.

Why it matters. Brokerage advantage is shifting to firms that empower advisors with technology, not just logos. WTW just invested directly in that thesis. (More)

INSURTECH CORNER

AI Grows Up

AI in insurance has officially left the lab. The clearest signal: automated underwriting now leads adoption, cited by 41.6% of respondents. Speed and consistency matter more than experimentation, and AI delivers both—shrinking decision timelines while tightening pricing discipline.

Close behind, fraud detection and risk management (38.8%) reflect rising claims complexity and digital velocity. Real-time pattern recognition is becoming essential, not optional.

Equally telling is the rise of personalization and customer engagement (38%). Insurers are shifting from reactive service to predictive interaction, borrowing playbooks from fintech and e-commerce.

AI-powered research and advisory tools are also gaining ground, helping underwriters and executives cut through data noise faster.

The takeaway: insurers aren’t chasing shiny objects. They’re deploying AI where measurable ROI, operational leverage, and competitive edge show up immediately. (More)

MACROECONOMICS

Tail Risk Rising, Markets Just Don’t See It Yet

Markets look calm, but the IMF’s growth-at-risk framework tells a different story. Despite low volatility and rising equity prices, the 5th percentile tail risk for global growth has widened. Translation: the odds of a sharp macro shock are rising.

The tail risk increase comes as investors ignore persistent economic policy, trade, and geopolitical uncertainty. Even as tariffs re-emerge and fiscal deficits balloon, asset prices continue climbing. Meanwhile, the U.S. dollar has decoupled from interest rate differentials, and sovereign debt is increasingly held by price-sensitive buyers.

The signal for allocators: don’t mistake stability for resilience. With NBFIs now deeply embedded in sovereign and credit markets, liquidity shocks could spread quickly. The IMF stress test projects $300B in forced U.S. Treasury sales under a bond fund outflow scenario. In that world, tail risk pricing matters again. (More)

COMPLIANCE CORNER

The Regulatory Trifecta Gets Real

Insurers are heading into 2026 facing a tighter three-way squeeze: data privacy, cybersecurity, and ethical AI—all enforced at once. State laws like California’s Insurance Consumer Privacy Protection Act and Connecticut’s expanded profiling limits are raising the bar on consumer rights and transparency. Meanwhile, the NAIC Insurance Data Security Model Law continues to flex more muscle, with broader enforcement around security programs, breach response, and vendor oversight.

The newest pressure point is AI governance. What was once innovation theater is now a compliance obligation, with requirements for algorithmic assessments, opt-outs, and anti-discrimination controls baked into underwriting and pricing.

Add rising expectations from cyber insurers themselves, and the message is blunt: privacy-by-design and ethical AI aren’t aspirational. They’re table stakes. (More)

INTERESTING ARTICLES

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