The paper analyzes contemporary trends in the digital transformation of the insurance sector through the application of information technologies, artificial intelligence, and digital communication channels, with a particular focus on their connection to the development of the green economy. The digitalization of business processes contributes to more efficient risk management, reduced administrative costs, and more rational use of natural and energy resources, thereby enhancing environmental sustainability and reducing the negative impact of the insurance sector on the environment. The use of artificial intelligence includes risk assessment, claims automation, fraud detection, and offer personalization, which increases decision-making accuracy and optimizes business processes. The role of social networks in client communication promotes transparency, public engagement, and awareness of responsible and sustainable consumer behavior. Identified trends – such as the integration of artificial intelligence and blockchain technologies, the rise of InsurTech startups, and the introduction of “green” insurance products (e.g., insurance for renewable energy and climate risks) – indicate a shift of the sector toward a business model based on the principles of environmental, social, and corporate governance (ESG). Based on a review of the literature and available case studies, the key obstacles to the successful implementation of digital transformation have been identified, including regulatory inconsistencies, high implementation costs, and the lack of digital competencies in Serbia’s insurance sector. The aim of the paper is to highlight the 280 ”Challenges of Digitalization in the Green Economy” Belgrade, October 30th, 2025 importance of digital transformation as a driver of the green transition and to propose guidelines for the further development of ESG-oriented business models in the domestic insurance sector.