The combination of rising customer expectations around personalized services, the ongoing digitalization of processes and products, and evolving distribution models present a clear opportunity for continued growth and competitive differentiation in the Italian insurance marketplace. In this article, we explore five key areas that will allow Italy’s insurers to thrive in 2026.
The Italian insurance market is in fine health, having recorded robust growth of 16% in 2024 (+20% life, +8% P&C), a trend confirmed in 2025 to date (+11% life, +8% P&C) and expected to continue in 2026.1,2 At the same time, this growth comes from a relatively low base: the Italian market is still characterized by lacklustre insurance penetration: in the property & casualty space (excluding motor), premiums amount to the equivalent of just 1% of GDP – a recognized measure of how important insurance is to an economy – compared to an average of 2.4% in Europe.3
Macro-factors from climate change, aging of population, the IoT/Big Data/AI revolution, evolving consumer preferences, cyber risk and pricing pressure are driving radical changes within the Italian insurance industry. The landscape is being further reshaped by local regulatory changes, such as new rules around natural catastrophes (nat cat) for enterprises and digital accident reporting, in addition to EU rules such as the Digital Operational Resilience Act (DORA) and Financial Data Access (FiDA) regulation.
While Italian distribution is still characterized by the primacy of professional intermediaries (agents and brokers), processes and offerings are inexorably moving toward the ‘phygital’ – the integration of physical and digital components. This will see an evolution in the activities carried out by the professional intermediaries, with a greater focus on consulting (assisted by the enhanced tools and data made available by digital innovation) and less on merely selling products. The phygital model will also require an adjustment in distribution structures and skills.
With the sector facing such tectonic transformations, we have identified five key areas for technology investment that Italian insurers should prioritize in 2026.
1. AI: embed at every step of the value chain
Many insurers have developed AI pilots and POCs. However, now is the time to move from piloting to embedding AI into operational processes across the value chain in a structural way to deliver the expected value.
Our experience has shown GenAI and Agentic AI to be powerful tools that accelerate insurers’ transformation journeys - safely and responsibly – by bringing together a range of AI capabilities specific to insurance in distribution, product personalization, underwriting, claims and fraud detection, already delivering measurable impact and long-term relevance to many clients.
2. Data: fueling AI innovation
Data serves a dual purpose: as a standalone driver of business intelligence and as the prerequisite for realizing the full promise of AI-driven transformation.
Italian insurers should further develop data analytics and cloud-based architectures to unlock this potential. By doing so, they can move beyond diagnostic toward predictive, prescriptive and generative models, for more powerful insights and decision-making, gaining further competitive edge.
3. Regulatory compliance: an opportunity
Companies often approach regulations in a tactical and therefore fragmented way – for example, to meet audit requirements. By thinking more holistically, addressing the more structural root causes of compliance shortcomings, carriers can benefit both from greater operational efficiencies as well as ensuring they are compliant by construction rather than by necessity, for instance in cybersecurity.
AI also offers real world benefits in this area. We have seen up to a 70% reduction in work effort for assessing regulation to policy alignment and for generating compliance documentation, and up to an 80% reduction for 'horizon scanning' for new regulations and when identifying in-scope regulations. This significantly eases the pressure on compliance teams, freeing them up for more strategically focused work.
4. Customer journey: start with the user experience
Our clients often reflect on fragmented user journeys across multiple systems and the need to streamline architecture. While this is a valid objective, the starting point should be user experience rather than internal processes.
Put yourself into your customers’ shoes and ask how you can simplify their life, benchmarking against leading digital retail and entertainment services. These are very different from most of today’s insurance experiences, yet this is what customers expect. Insurers, like banks, have a great opportunity to design superior customer journeys in line with the benchmark of modern digital interactions.
5. Channels: digital offers new venues
Insurance distribution in Italy operates through a blend of traditional and new channels. Historically, agents and brokers dominated the market. However, younger generations are gravitating towards digital channels, for instance buying directly from social media. While digital channels are growing rapidly, insurers need to deploy the right channel strategies to drive every interaction to the most effective channel.
Embedded insurance – bundling in insurance when purchasing a non-insurance product or service – has been gaining traction in Italy, reaching new customers via non-insurance players, like telecoms, retail and automotive. Insurers need to open their systems to seamless integration, in order to be selected by modern distribution partners to grow their business.
Conclusion
Italy’s insurance industry faces new local regulations, which, combined with new customer needs, distribution models and digital offerings, now presents further growth potential for a market still characterized by low insurance penetration.
Our 2023 survey of Italian policyholders identified a significant opportunity for insurers to apply digitalization and data-oriented investments to transform processes, improve value for money, and offer their customers a much more seamless and personalized experience.4 Our recommendations highlight five powerful levers that Italian insurers can use to move to the next level of transformation to meet these and other opportunities - and establish themselves as innovation leaders.
Having partnered with the world’s premier financial institutions for over 25 years to drive transformation, Capco aims to accelerate the digital transformation of the Italian insurance industry. Drawing on our global expertise and experience, our Italian insurance practice is helping local clients to solve their most complex challenges.
Contact us to find out how Capco can assist with your transformation, including:
- Data strategies
- Legacy modernization
- Claims optimization
- Digitizing operations, customer journeys and contact centers
- Cloud implementation
- Omnichannel customer experience
- Reimagining insurance through AI and more.
References
1 https://www.ania.it/
2 https://www.imf.org/
3 https://www.eiopa.europa.eu/
4 https://www.capco.com/intelligence/capco-intelligence/italy-insurance-survey-2023