TL;DR
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70% of insurers have AI running in live operations, but 20% are cutting training budgets at the same time.
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The most advanced AI users are cutting headcount at five times the rate of early adopters. The workforce implications are already landing at the leading edge.
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88% of leaders are optimistic about the industry’s future but 91% of executives say their teams have never been more stretched.
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The full findings are in Covenir’s 2026 Insurance Operations Leaders Trends Report. Access it here.
For the last two years, my team has surveyed insurance operations leaders across carriers, MGAs, and Insurtechs to find out what’s on the minds of the people on the ground responsible for claims, FNOL, back-office operations, and the day-to-day work that holds policyholder relationships together.
The output of that work, the Insurance Operations Leaders Trends Report, is chock full of insights about the people and organizations making the insurance industry work. In this year’s report we revisited some of the trends from last year and explored some new ones. In this blog, I’ll deep dive into one of the hottest topics on the insurance event circuit for the past several years: AI.
The Number That Surprised Me
Seventy percent of organizations in our survey now have AI running in live operations. That’s up from 58% just one year ago. I wasn’t surprised by that. I hear it in customer conversations every week. AI has moved from experiment to execution across the industry. What I wasn’t prepared for: 20% of those same organizations are simultaneously cutting their training and development budgets. Only 7% are actively protecting them.
I’ve been in insurance operations long enough to know that when you widen the gap between what a system can do and what the people running it are prepared for, that gap doesn’t stay inside the organization. It travels. It shows up at the moments that matter most: a policyholder’s first call after an accident, a billing dispute that escalates because it wasn’t handled right the first time, a claims intake that goes sideways because the agent didn’t have the support they needed.
What the Leading Edge Is Telling Us
We went deeper this year and looked at organizations by AI maturity, specifically comparing early adopters running AI in one function to more advanced organizations running AI across multiple functions. The early adopters are seeing impact where you’d expect: customer satisfaction improvements, reduced handling time, faster claims resolution. Good results from a solid start.
But among the organizations furthest along, a different pattern is emerging. 54% of that group say headcount is where they plan to reduce investment most in 2026. That’s more than five times the rate of their less mature peers. What the data tells us is that AI maturity and headcount reduction are moving together, a trend to continue watching for sure.
The Optimism Paradox
Here’s the other thing that struck me: 88% of leaders say they’re optimistic about the industry’s future. That number is up from 83% last year. And in the conversations I have every day, I believe it. These are experienced people. They’ve navigated hard cycles before. The confidence is earned.
But 91% of executives in our survey also say their teams are more stretched than they’ve ever been. That tension is actually the most honest description of where insurance operations sits in 2026: genuinely confident about where the industry is going, and genuinely pressured by the conditions on the ground getting there.
What We’re Doing About It at Covenir
Covenir is facing the challenges facing the industry like everyone else. I mark myself as one of those executives excited about the future.
Through our parent company Volaris, we’ve made a deliberate choice to invest in AI training as a team discipline, not something individuals figure out on their own. We’re going through it together, including structured work sessions where our people learn alongside each other how to use AI in ways that improve the business and the experience we deliver to policyholders. Those improvements also improve our fit as a strategic partner to our customers.
We also believe that as insurers navigate this transition, outsourcing partnerships play a different role than they used to. 29% of respondents in our survey now expect their outsourcing partners to have AI embedded in their services. That’s not a nice-to-have. It’s a reflection of how the relationship has changed. We’re answering that call today at Covenir with AI agent intake, live human rep coaching and delivery of management insights that give leaders something actionable from the data.
There’s More in the Report
We covered a lot of ground in this year’s research: the brand promise gap at FNOL, the data-to-decisions problem that’s holding back the middle of the market, and what’s driving the jump in outsourcing adoption from 70% to 81% in a single year. If any of this resonates with what you’re seeing in your own operations, the full 2026 Insurance Operations Leaders Trends Report is worth a read.
Download the full report
The 2026 Insurance Operations Leaders Trends Report is based on a survey of 152 U.S.-based insurance operations decision-makers at carriers, MGAs, and Insurtechs, fielded in February and March 2026.
Frequently Asked Questions
What is AI readiness in insurance operations?
AI readiness in insurance operations refers to an organization’s ability to deploy AI effectively across claims, FNOL, back-office, and customer-facing workflows, while also preparing its people, processes, and partners to work alongside the technology. It’s not just about having AI running. It’s about having the training, workflow design, and organizational discipline to make it deliver consistent outcomes for policyholders.
What does Covenir’s 2026 survey show about AI adoption in insurance?
70% of insurance operations organizations now have AI running in live operations, up from 58% in 2025. But 20% are simultaneously cutting training and development budgets, while only 7% are actively protecting them. The survey of 152 U.S.-based insurance operations decision-makers also found that among the most advanced AI users, 54% are cutting headcount at five times the rate of less mature organizations.
Is AI replacing workers in insurance operations?
Not at scale yet, but the data shows early signs at the leading edge. Among insurers running AI across multiple functions, 54% say headcount is where they plan to cut investment most in 2026, more than five times the rate of early-stage AI users. For most organizations today, AI is supporting human work rather than replacing it. But among the most advanced adopters, the workforce implications are already showing up in investment decisions.
Are insurance operations leaders budgets going up or down?
68% of organizations in Covenir’s 2026 Insurance Operations Leaders survey reported budget increases.
What do insurers now expect from outsourcing partners?
Expectations have shifted significantly. 29% of insurance operations leaders now expect outsourcing partners to have AI solutions embedded in their services. Beyond that, they’re looking for strategic partnership, deep insurance expertise, and rigorous compliance management. As organizations reduce headcount while accelerating AI adoption, outsourcing is increasingly playing a role in their AI strategy, not just their cost structure.