Insurance companies in Australia and New Zealand continue to invest in new technologies and services, including AI, to become data-driven, digital-first organizations, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.
The 2024 ISG Provider Lens™ Insurance Services report for Australia and New Zealand finds that insurers in the region are carrying out digital transformations to become more efficient and comply with evolving regulations. Insurers face declining margins, with inflation and extreme weather affecting claims. Changing consumer expectations and competition from startups are forcing established firms to innovate in products and customer experiences.
“Insurance companies in Australia and New Zealand need to move beyond legacy systems and cultures to remain competitive,” said Michael Gale, partner and head of ISG Asia Pacific. “Service providers are helping them make essential leaps in technology.”
AI and generative AI are playing a growing role as insurers in the region adopt tools for use cases such as automated claims processing, better customer interactions and predictive analytics for risk management, the report says. The analytical and performance capabilities of AI are expected to simplify complex insurance products and enable cost optimization. However, full AI readiness will require the ability to cultivate and apply highly granular data.
Property and casualty (P&C) insurers, for one, are implementing data analytics to improve risk assessment and customer segmentation, leading to better decision-making, the report says. To improve and personalize customer service, they are integrating traditional and digital channels. There is a growing trend toward partnerships with newer insurtech companies to boost innovation and efficiency. Business process outsourcing (BPO) providers are helping P&C insurers comply with regulations, especially in security and automation efforts.
Life and retirement (L&R) insurers are also turning to BPO providers to meet evolving policyholder demands, ISG says. While L&R insurance is less commonly purchased than P&C coverage in Australia and New Zealand, growing economic uncertainty has led more consumers to improve their insurance protection.
Traditional IT outsourcing remains a big part of insurance enterprises’ IT budgets in Australia and New Zealand, though companies are exploring a range of strategies, including nearshoring, offshoring, insourcing and outsourcing, to address resource issues, ISG says. As they update IT infrastructures, insurers are increasingly adopting Agile methodologies and relying on cloud-based platforms.
“Digital transformation for insurers in this region will require major investments in cloud, data management and security,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “ITO service providers with expertise in these areas will be important partners in this process.”
The report also examines other trends affecting insurers in Australia and New Zealand, including the need for enterprises to retain intellectual property rights when adopting AI and the growing importance of controls to prevent data leakage from AI models.
For more insights into the challenges faced by insurance enterprises in Australia and New Zealand, along with ISG’s advice for addressing them, see the ISG Provider Lens™ Focal Points briefing here.
The 2024 ISG Provider Lens™ Insurance Services report for Australia and New Zealand evaluates the capabilities of 40 providers across four quadrants: Life and Retirement (L&R) Insurance BPO Services, Property and Casualty (P&C) Insurance BPO Services, Insurance ITO Services and Insurance ITO Services — Midmarket Next-gen.
The report names TCS and Tech Mahindra as Leaders in three quadrants each. It names Cognizant, Genpact, TSA and Wipro as Leaders in two quadrants each. Accenture, Capgemini, Cloud4C, DXC Technology, EXL, Fujitsu, IBM, Infosys, Iron Mountain, Kyndryl, Publicis Sapient, Randstad Digital, Teleperformance, Unisys and WNS are named as Leaders in one quadrant each.
In addition, EXL, HCLTech, WNS and Xceedance are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.
A customized version of the report is available from WNS.
In the area of customer experience, Persistent system is named the global ISG CX Star Performer for 2024 among insurance services providers. Persistent system earned the highest customer satisfaction scores in ISG’s Voice of the Customer survey, which is part of the ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.
The 2024 ISG Provider Lens™ Insurance Services report for Australia and New Zealand is available to subscribers or for one-time purchase on this webpage.
