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Insurers Embrace AI Innovations in Australia, New Zealand

1. Australian and NZ insurers invest in AI for digital transformation. 2. Inflation and extreme weather impact insurer margins, driving innovation. 3. Insurers enhance services through partnerships with insurtech firms. 4. BPO providers help insurers meet regulatory demands amid changing consumer expectations. 5. Major tech investments needed for compliance and efficiency improvements.

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FAQ

Why Bullish?

Increased investment in technology could enhance ISG's market position, similar to past improvements in revenue following strategic upgrades.

How important is it?

The article discusses significant industry trends that may increase ISG's service demand and relevance in tech solutions.

Why Long Term?

Sustained technological advancements may improve overall market competitiveness, akin to previous long-term growth trajectories for tech-centric firms.

Related Companies

IIITCSTech MahindraCognizantGenpactAccenture
SYDNEY--(BUSINESS WIRE)--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. About ISG Provider Lens™ Research The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Mexico, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage. About ISG ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including AI, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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