AutoRek, a financial operations automation platform, has revealed that 82% of insurers believe AI will dominate the industry’s future, yet just 14% have fully integrated it into their financial operations, exposing a stark divide between ambition and real-world adoption across the sector.
The findings come from AutoRek’s 2026 Insurance Report, which surveyed 250 insurance and healthcare insurance managers across the UK and US.
The research also highlights that 44% of firms are grappling with settlement periods exceeding 60 days, while 14% of operational budgets are being spent correcting errors stemming from manual processes.
Settlement cycles are coming under increasing strain, particularly among larger organisations.
Firms processing more than 10 million transactions annually average 59-day settlement periods, compared to 52 days for smaller peers.
Spreadsheet reliance (46%), high transaction volumes (41%) and fragmented data (41%) were identified as the main drivers of delay, with transaction volumes expected to grow by 28.7% over the next two years.
AI adoption across the sector remains uneven, with 6% of firms reporting no AI usage whatsoever. Legacy system integration challenges (42%), fragmented data environments (39%) and a shortage of in-house AI expertise (40%) are among the key barriers holding firms back. Over half describe their data governance frameworks as early-stage or still developing, raising doubts about the sector’s readiness to deploy AI at scale.
Data fragmentation compounds the challenge further. Insurers manage an average of 17 data sources feeding their premium processes, and 54% cite differing systems and data architectures as the biggest obstacle following mergers.
This level of complexity makes layering on automation or absorbing new business through M&A particularly difficult without introducing additional operational risk.
Despite these challenges, there are signs the industry recognises the need to modernise. Half of firms are prioritising AI and machine learning, 42% are focusing on automating back- and middle-office functions, and 51% say regulatory requirements are a primary driver of their modernisation decisions.
AutoRek Insurance Sector Lead Tony Shek said, “Insurers know where the industry is heading. The challenge is that most haven’t translated that awareness into operational change. Settlement cycles are lengthening, data environments are getting more complex, and the firms that have already embedded automation into their financial operations are pulling ahead. The longer firms wait to modernise, the harder it becomes to close that gap.”
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