Kathmandu. As artificial intelligence (AI) is reshaping the global insurance industry, private equity investors continue to invest in insurance assets.
According to a report released by McKinsey & Co. in February 2026, the overall insurance contract flow declined in 2025, but the insurance sector remained active. Broker transactions, which account for about 70 percent of the total contract count, declined by about 20 percent year-on-year as the market matured.
The Managing General Agents (MGAs) accounted for about 5 percent of the insurance contract flow. Third-party administrators (TPAs) have increased their average annual insurance contracts by about 15 percent over the past five years.
Investments in insurance, software and data providers, supported by recurring revenues, also continued, the report said. “The U.S. led insurance activity,” the report said, adding that U.S. private equity investment in insurance grew 26 percent annually from 2020 to 2025. ’
In the first six months of 2025, the volume of U.S. contracts reached $6.3 billion, out of 164 agreements. In contrast, capital invested in Europe has declined at an average annual rate of about 18 percent.
McKinsey estimates that generative AI, particularly in marketing and sales, customer operations, and software engineering, could generate $50 billion to $70 billion in additional revenue for the insurance industry.
MGA has become one of the fastest-growing sectors. U.S. premiums rose from $47 billion in 2020 to $97 billion in 2024. That’s a compound annual growth rate of about 14 percent.
According to McKinsey, AI is helping reduce underwriting and quotation time from weeks to days, and in some cases from two to three days to one to two hours. The report says that AI is more likely to reshape existing insurance models rather than replace them. “Returns will depend on how effectively companies scale and deploy the technology,” the report said. –Agency
