Changes in insurance distribution trends can have a big impact on insurance agencies, and AI is set to bring about major changes. In 2026, insurance agents can expect to see more AI adoption among both carriers and policyholders, and they need to be ready.
AI Adoption Is Surging
According to Yahoo Finance, AI in the insurance market was valued at $8.63 billion in 2025, and it’s expected to grow at a CAGR of 27.32% to reach $59.5 billion by 2033. The insurance industry is adopting AI rapidly, and according to Digital Insurance, insurers will focus on achieving measurable results from their AI investments in 2026.
AI adoption is also increasing among typical consumers. OpenAI says it serves more than 800 million users every week as of December 2025 – and that’s just one of the many tools now available to people.
The AI tsunami is here. For insurance agents, things are changing fast whether you want them to or not. The key is to prepare for what’s coming.
How Is AI Changing Insurance Distribution?
AI has uses in many different aspects of insurance, from enhanced fraud detection to more granular underwriting. In insurance distribution specifically, AI promises the following:
- Instant 24/7 Communication. Insurers can implement AI-powered chatbots and voice AI programs to handle customer service inquiries, including requests for quotes. This means customers won’t have to wait on hold or try again during business hours – they can get assistance on demand.
- Hyper-Personalization. AI’s ability to analyze data makes new levels of personalization possible. Policyholders can get customized recommendations for policies and risk management, which could lead to more sales and great policyholder satisfaction.
- Increased Efficiency. Insurance professionals can use AI to handle tedious tasks, such as data entry, or to analyze and summarize large amounts of information, giving them more time to devote to other endeavors.
- More Direct Channel Options. AI can power embedded insurance options. For insurance agents, this may lead to increased competition as consumers secure insurance directly from carriers and from brands that bundle insurance with their product or service.
There’s No Time to Wait
Many insurers have already adopted AI, and some are seeing promising results. According to McKinsey & Company, an insurer used intelligent automation to provide quotes and sell policies. After implementation, 80% of transactions moved online, and customer satisfaction scores rose by 36%. In another example, a carrier used a chatbot to handle after-hours customer service needs, leading to an 11% increase in the number of prospective customers who bought coverage.
If you’ve been taking a wait-and-see approach as an agent, it’s time to act.
Here’s what agents can do:
- Modernize your tech stack. Modern technology can make it easier to deliver excellent customer service without burning out. As AI enables faster responses, consumer expectations will change quickly, so even if you think your old system is serviceable, you may need to upgrade to keep up.
- Focus on the human touch. Rapid AI adoption has also led to pushback from consumers. According to Pew Research Center, 50% of U.S. adults are more concerned than excited about AI, and another 36% are equally concerned and excited. Many of your clients and prospective clients will likely be eager to see the benefits of AI, such as fast responses, but wary of overreliance on AI. You can stand out and win over clients by leveraging tech to free up time so you can provide real, human interactions.
- Strengthen your position. AI is a game changer. Insurance agents may see increased competition, not just from other agencies using AI to grow, but also from carriers and other companies leveraging direct channels to sell insurance. Agencies that have robust resources will be in a stronger position to pivot as needed to take advantage of new opportunities. Consider whether you have the carrier access and training support you need to succeed.
How Heffernan Network Can Help Agencies
Do you have the resources necessary to keep up with AI’s impact on insurance distribution?
Heffernan Network offers agency acquisition and perpetuation services. Agencies that become part of the Heffernan Network gain exclusive access to top carriers, business and leadership development, and vetted technology solutions. If you need a new partner to help you succeed in a fast-changing environment, Heffernan Network may be exactly what you need. Learn more.
