Global insurers may face a new wave of growth and disruption as emerging industries such as artificial intelligence, cybersecurity, electric vehicles, robotics, biotechnology and space create new categories of risks requiring insurance cover, according to a new report by McKinsey & Company.
The report, titled “The strategic new arenas reshaping insurance”, identifies 18 high-growth industries that could generate between $29 trillion and $48 trillion in revenues by 2040 and account for up to one-third of global economic growth.
McKinsey said the industries, which it describes as “arenas”, are creating new assets, technologies, liabilities and consumer behaviours that could expand the pool of risks available to insurers beyond traditional lines of business.
The consulting firm said the development comes as insurers face slowing premium growth in mature markets, with recent global premium expansion driven largely by rate increases rather than substantial growth in underlying insurance coverage.
According to McKinsey, the 18 arenas span five broad areas: AI foundations, digitisation, electrification, hard technology and new bio-frontiers.
They include AI software and services, semiconductors, cloud services, digital advertising, e-commerce, streaming video, cybersecurity, video games, electric vehicles, batteries, nuclear fission, space, robotics, shared autonomous vehicles, future air mobility, modular construction, biotechnology and obesity drugs.
McKinsey said revenues across the 18 industries grew about 10 times faster than those of other industries between 2022 and 2025, while the companies operating in these areas added about $18 trillion in market capitalisation during the period.
AI accounted for about $11 trillion of the increase, although the report noted that other emerging industries were also recording substantial growth.
For insurers, McKinsey said the expansion of these industries could create new premium pools while changing the nature of risks they currently cover.
“The arenas thus present opportunities to access new premium pools, build differentiated capabilities, and improve profitability,” the report said.
However, the report warned that many of the emerging risks are more interconnected and evolve faster than traditional risks, while insurers have limited historical claims data with which to price them.
McKinsey identified four major ways the new industries could affect insurance.
First, they could create risks that existing insurance products were not designed to cover. AI-powered systems, autonomous vehicles, robotics, cyber threats and space activities, for example, could require new liability frameworks and risk-sharing arrangements.
Second, the technologies could change the frequency and severity of claims. Some emerging technologies may reduce the number of incidents while increasing the financial impact when failures occur.
Autonomous vehicles could reduce conventional road accidents, for instance, but a software failure or cyberattack affecting an entire fleet could produce a much larger and more correlated loss.
Third, technologies such as AI, drones and Internet of Things sensors could reduce insurers’ operating costs by improving underwriting, property inspection, claims processing and fraud detection.
Fourth, advances in medicine and biotechnology could change the assumptions underlying life and health insurance.
McKinsey pointed to the growing use of GLP-1 obesity drugs as one example, noting that improvements in cardiovascular health and longevity could affect mortality and morbidity assumptions used by life insurers, annuity providers and pension businesses.
The report also highlighted the implications for property and casualty insurers.
For personal insurance, electric vehicles and batteries could create higher-severity claims because battery damage can result in total losses or more expensive repairs. Battery fires could also create exposures that cross between motor and property insurance.
Cybersecurity is also emerging as a distinct insurance market, with risks including ransomware, identity theft, AI-enabled attacks and vulnerabilities affecting connected homes and devices.
For commercial insurers, McKinsey highlighted the growing exposure associated with cloud services, data centres, semiconductors, space and robotics.
The expansion of hyperscale data centres, for example, is creating facilities with insured values that can exceed $10 billion, while outages affecting major cloud providers could trigger business interruption claims across thousands of dependent businesses at the same time.
Similarly, the concentration of advanced semiconductor production in a small number of locations means a single disruption could have consequences across automotive, electronics, defence and data centre supply chains.
McKinsey said such risks could challenge traditional insurance models because losses may become more concentrated and correlated, requiring insurers to develop specialist underwriting capabilities, new capital structures and continuous risk monitoring.
AI, meanwhile, is expected to cut across virtually every insurance segment rather than remain a standalone market.
Beyond creating new liabilities around faulty decisions, privacy, intellectual property and cyberattacks, AI could automate routine insurance processes, support underwriting decisions and improve fraud detection and claims management.
McKinsey cited Ping An as an example, saying the insurer has automated nearly 60 percent of accident and health claims, while Zurich uses an AI-supported fraud-scoring system across most of its more than 600,000 annual non-life claims.
The report said the broader shift could eventually move insurance from a model focused primarily on paying claims after losses occur towards one that uses continuous monitoring and predictive tools to prevent losses.
For insurers, McKinsey said the challenge will be identifying which emerging industries are likely to affect their businesses over the next five years and determining whether they have the expertise, technology and capital required to underwrite the associated risks.
The firm urged insurance executives to assess how much of their existing portfolios could be affected by the emerging industries and whether they need new partnerships, reinsurance arrangements, insurance-linked securities or mergers and acquisitions to build the capacity required for new risks.
McKinsey’s assessment suggests that the next phase of insurance growth could therefore come not only from expanding existing products, but from keeping pace with changes in the wider economy and developing ways to price and manage risks that did not exist, or were not significant, in traditional insurance markets.
