Only 8% of insurance BPO users would renew their contracts as-is

Insurance outsourcing contracts are being reopened as buyers seek AI-led efficiency and stronger strategic value.

HAMILTON, Bermuda — Only 8% of surveyed insurance organizations using business process outsourcing (BPO) would renew their contracts as-is. Among the 110 BPO users in the study, 86% would renegotiate to capture AI-driven efficiencies or completely rework terms and service levels if those contracts were renewed today. Buyers are reopening price, scope and accountability together to reflect AI-enabled delivery. The finding comes from The State of Insurance Operations, published by ISG, the global AI-centered technology research and advisory firm, based on research commissioned by mea Platform.

The study surveyed 150 insurance decision-makers in August 2026 across primary carriers, brokers, MGAs and reinsurers in North America, Europe and Asia.

AI-led innovation falls below expectations for 49% of BPO users, the largest shortfall among the nine dimensions assessed, and strategic value for 39%. ISG recommends that insurers compare incumbent providers, alternative providers, platforms and internal build options using equivalent workflow evidence.

Insurance outsourcing runs across the value chain, from submission intake and underwriting support to policy administration, claims adjudication support, reinsurance accounting, statutory reporting and sanctions screening. In life, annuity and retirement, third-party administrators may run entire blocks of business, including closed blocks, on their own systems. Traditional arrangements are often priced by transaction or by full-time equivalent, linking the cost of additional capacity to transaction volume or staffing.

Published estimates vary materially because analysts define the category differently. Global Market Insights values the insurance BPO market at $7.5 billion in 2025, The Business Research Company at $8.4 billion, and Mordor Intelligence places the broader insurance BPO services market at $68.4 billion in 2026.

An AI execution platform offers a different delivery and cost model for defined components of the same work. Insurance-specific platforms can reduce the direct dependence of additional capacity on additional headcount, provided they operate within the insurer’s systems, controls and exception-management processes.

For high-consequence underwriting and claims decisions, 75% of respondents would trust only an insurance-specific model or a governed hybrid approach. Only 6% would trust a general-purpose model alone, while 20% would not trust limited-oversight AI. The report outlines four conditions for trusted execution: controlled evidence sources; explicit permissions; accountable human oversight; and institution-specific rules.

“Traditional BPO arrangements made sense when the only way to handle more submissions was to put more people onto the problem. Today insurers can execute workflows across underwriting, policy administration, claims and reinsurance accounting on systems that already understand insurance, deployed in weeks, scaling with demand and leaving a record of every action taken.”

Martin Henley, CEO, mea Platform

“The shortfall buyers name most often is AI-led innovation, and that is difficult to address at renewal because a price concession alone does not resolve it.”

Ashish Jhajharia, Insurance SME and Principal Analyst, ISG

The full report, including the provider analysis, is available at www.meaplatform.com/state-of-insurance-operations.

mea is the insurance-native agentic AI company. Built by insurance operators, its agents run core workflows across underwriting, claims, finance and broking on a proprietary domain-specific language model℠ (dsLM) and insurance knowledge graph℠. mea is live with more than 30 clients across 21 countries and has processed more than $450 billion in gross written premium. www.meaplatform.comAbout ISG ISG (Nasdaq: III) is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world’s top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data and research, in-depth knowledge and governance of provider ecosystems, and the expertise of its 1,500 professionals worldwide working together to help clients maximize the value of their technology investments.

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mea Platform. Elliott Bundy, Chief Marketing Officer.

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