Live take from ITC Vegas: Buzzing about innovation and transformation

October 22, 2025The annual McKinsey-sponsored ITC Vegas insurance conference, which just celebrated its tenth anniversary, again proved its value as a major event in the insurance world, with thousands of participants covering the full range of ecosystem participants: carriers, agents, brokers, investors, and tech providers. This year, the overall sentiment was optimistic. Many conversations focused on the potential and need for innovation and transformation—reflecting excitement about the rapid developments of AI and the promise to deploy them at scale, as well as news of recent private equity exits, IPOs, and new capital infusion that all suggest new dynamics. Here are our four main takeaways:

1. Innovation as the cornerstone of future competitive advantage

   At last year’s ITC conference, everyone was talking about AI, but for all the curiosity, very few were actually scaling it. This year, as AI becomes real and the first results come in, we noticed a marked change in the conversation. Most carriers and brokers are using AI in some way, and we observed more carriers pivoting from deployment of tools like Chat GPT and copilots to bringing more complex and end-to-end AI use cases into their core businesses, including underwriting and claims. Quite a journey remains before they achieve critical scale, but we sense a strong focus on tech-driven innovation as the way forward.

   The prize is competitive advantage: Insurers that are AI leaders are already outshining their peers. Our research shows that over the past five years, the insurance sector’s AI leaders have created just over six times the total shareholder return of AI laggards, compared with two to three times in most other sectors.

2. Figuring out what will change in an AI world

   In the pursuit of innovation—and to capture the full value or AI—carriers are focusing on modernizing their tech stack and improving data quality and access. This has widespread implications for capital allocation, strategic priority setting, and operations. We are seeing a particular expectation of change in the near to mid-term in the role of technology leaders, including CIO, CTO, and CDO positions. At ITC, we convened about 20 senior technology leaders and asked for their views. Two-thirds told us they envision technology executives evolving from operators providing the tech infrastructure to strategic co-leaders helping shape overall business strategy with the CEO. Some 70 percent expect the lines will blur between business and IT, with each side needing to become conversant in the other’s domain. And more than 60 percent expect the talent model to evolve into one where AI agents and humans work side-by-side in teams. That has major implications not just for workforce planning but also for issues including AI ethics and data governance.

3. M&A is switching focus. How disruptive will the new wave be?

   The volume of mergers and acquisitions and invested dollars in insurance were down about 20 percent in the first half of 2025, but the data fails to capture the momentum we are seeing in some newer areas of focus. Much of the previous M&A activity centered on retail brokerage, but this area is now more saturated, and after years of high deal velocity, investors are seeing fewer arbitrage opportunities (although the retail broker deals that do occur are larger, in the range of $700 million to $2.5 billion or more). By comparison, areas where interest is growing include third-party administrators (TPAs) and managing general agents (MGAs). MGAs are one of the fastest-growing subsectors in insurance, with premium volumes channeled through them growing at double-digit rates in the past few years. For their part, many TPAs are evolving from traditional claims handlers into full-service platforms integrating analytics, automation, and AI-driven guidance. Their proximity to transaction-level data makes them prime beneficiaries of AI-enabled performance improvement.

   The growth in interest in such players is backed by a private equity appetite for high-margin, capital-light insurance platforms and has led to annual growth of about 20 percent in private equity deals and investment dollars since 2020. The IPO of a flood insurance MGA at the high end of its range just days before ITC was just the latest of several successful public offerings this year. Such activity underscores the significant opportunity that the insurance ecosystem represents for AI implementation, as workflow inefficiencies and massive data utilization create a meaningful entry point for future technology and tech players.

4. Scaling insurtechs: Moving from use case solutions to full workstream solutioning

As we have written elsewhere, insurers looking to succeed with their AI transformation need to do more than run a few pilots, expect true AI enablement to come from buying a patchwork of software-as-a-service products, or hope that workflows will be transformed by off-the-shelf AI solutions. To create lasting business value from AI, insurers need to set an enterprise-wide vision for AI’s potential and fundamentally rewire how they operate across the various business domains of underwriting, claims, distribution, customer service and more. The challenge here is to embed the technology into every part of the organization—a topic that is top of mind for C-suites and was an important focus of conversation at ITC.

We observe that best-in-class insurers are already taking a domain-based approach to transformation. They choose certain business functions—such as distribution, pricing and underwriting, claims, investments—and comprehensively revamp how that function operates. So far, domain-level rewiring with AI has had a measurable impact on key parts of insurance businesses, including a 10 to 20 percent improvement in new-agent success rates and sales conversion rates, a 10 to 15 percent increase in premium growth, a 20 to 40 percent reduction in costs to onboard new customers, and a 3 to 5 percent accuracy improvement in claims.

Our observations point to one clear takeaway: ITC participants this year are intently focused on the future and are putting together road maps for getting there. AI is emerging as a game changer for insurance, just as it is in many other industries. The road ahead is sure to be challenging, but finding the right path is already bringing rewards for leaders. With innovation and transformation as the watchwords for the industry, we look forward to the next ITC, where we can gauge how quickly the changes we noted this year have been taking root.

Grier Tumas Dienstag is a partner who co-leads McKinsey’s Insurance and Private Equity and Principal Investors Practices’ joint venture work in North America, based in McKinsey’s Boston office. Sanjay Kaniyar is a partner and leader in digital and technology for the Insurance Practice, also based in the Boston office, where Tanguy Catlin is a senior partner.

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