P&C insurers boost AI spending, but full integration still lags

P&C insurers are pouring more money into AI, but Federato’s 2026 State of P&C Insurance Technology report says only 23% have achieved full integration. The sharper problem is inside the workflow: 91% of P&C leaders said they had real-time portfolio control, while only 27% of underwriters said the same.

That split captures the execution gap that keeps showing up in carrier technology programs. Federato’s report frames the slowdown around legacy infrastructure, data problems, workflow integration issues, regulatory concerns and skill shortages, all of which make it hard to move an AI pilot into the core policy, claims and underwriting stack. The issue is not a lack of interest. It is the handoff from model output to actual underwriting and servicing decisions.

The underwriting workbench sits at the center of that bottleneck. Federato says old core underwriting workbenches can hold insurers back, and that point lines up with what many carriers run into when they try to push AI beyond chatbots and document parsing. If the workbench cannot surface the right data, trigger the right task, and pass clean outputs into policy administration or claims systems, the AI layer stays stuck on top of the operation instead of inside it.

The same pattern was visible years ago. In an April 19, 2017 report, Accenture said insurers were investing in AI to improve customer experience, faster claims handling and individualized risk-based services, while integration challenges remained. The use cases have changed, but the plumbing problem has not. Carriers still need data that can be trusted, workflows that can absorb machine recommendations, and core systems that do not break when AI is added to the front end.

That is why the current spending surge does not translate cleanly into operating leverage. Federato’s numbers show leadership teams reporting control far more often than the underwriting teams that have to live inside the tools every day. Until carriers close that gap between executive dashboards and day-to-day underwriting work, AI budgets will keep rising faster than production value.