Blog: Rising complexity tests UK insurance claims model

Mounting pressures from skills gaps, inflation and AI are forcing insurers to rethink claims strategies across UK, says Charlotte Harrison-May, head of carrier and market relationships at Gallagher Bassett.

UK insurers face mounting pressure from talent shortages, rising costs and rapid technological change, leaving little margin for error in maintaining profitability. 

These challenges are highlighted in The Carrier Perspective: 2026 Claims Insights, Gallagher Bassett’s fourth annual claims report, which draws on responses from 250 insurance leaders and decision makers across the UK, Australia and North America. What stands out most in the UK data is not a single dominant threat, but the way multiple pressure points are stacking at speed. 

Why workforce shortages are no longer just a people issue 

The most significant issue facing UK insurers today is talent attraction and retention. More than 70% of UK respondents tell us that difficulties securing skilled specialists are already limiting their operational capacity, with claims roles cited as the hardest to fill.

Increasingly, claims are no longer seen as a back‑office function. Claims teams now play a central role in developing customer trust, managing cost outcomes and meeting regulatory requirements. At the same time, the work itself is becoming more sophisticated. Litigation rates, rising numbers of severe claims and greater customer expectations all demand deeper expertise and stronger judgement.

Claims teams play a central role in developing customer trust, managing cost outcomes and meeting regulatory requirements.

Charlotte Harrison-May, Gallagher Bassett

Rising claims’ costs prompt a pricing response

Alongside workforce constraints, rising claims costs continue to weigh heavily on UK insurers. Nearly 60% of respondents identified increasing costs as a top business challenge for 2026, driven by social inflation, litigation trends, and increased medical costs per claim.

The industry remains concerned about premium affordability, and insurers are responding by tightening underwriting, enhancing risk assessments and revising pricing strategies to balance customer expectations and commercial goals.

Responses suggest insurers are combining pricing action with enhancements to key operational levers – improving claims triage, processing and time-to-decision – to counterbalance inflationary pressure without undermining growth or customer relationships.

AI adoption accelerates as risk evolves

Technology adoption has accelerated rapidly, with generative AI now firmly embedded in the UK claims landscape. Our research shows that 73% of UK respondents are already using generative AI in claims, the fastest adoption rate across all regions surveyed.

For insurers facing acute talent shortages, the appeal is obvious. AI-powered tools can automate routine tasks, support human decision‑making, and be applied in a counter-fraud context. Implemented properly, they can provide skilled professionals with the capacity to focus on complex, high‑value work that requires their expertise.

How the market is responding to growing complexity

Workforce shortages, cost inflation and technology risk are interconnected, and business decisions in one area will inevitably affect the others. For example, talent constraints may increase reliance on automation which, in turn, heightens exposure to new risks in transparency and consumer duty obligations. 

Rising claims costs place greater pressure on teams who may already be dealing with capacity constraints and increased case complexity. Technology may relieve some of that pressure but only if it is deployed responsibly and supported by skilled oversight.

The UK insurance market is undergoing a period of recalibration, with insurers adjusting operating models and reassessing priorities. As claims environments grow more complex and capacity constraints persist, long‑term resilience will hinge on adaptability and the preservation of customer focus. Insurers may choose to pursue innovation but it must not be at the expense of strong governance, consistency and sound decision‑making.

Further details can be found in The Carrier Perspective: 2026 Claims Insights, which combines responses from global industry professionals with insights from Gallagher Bassett’s in‑house experts. The report examines the evolving claims landscape, regional differences and the strategies insurers are using to navigate emerging market challenges.

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