A new industry report has revealed that high-impact IT outages are costing financial services and insurance companies an average of $3.4 million (US$2.2 million) per hour, placing increased pressure on firms to invest in observability and artificial intelligence to reduce downtime and maintain operational resilience.
The findings, published by New Relic in its 2024 State of Observability for Financial Services and Insurance report, highlight the growing reliance on observability platforms across the sector.
Based on global survey data from industry professionals, the report outlined the business value of observability, especially in regions like Asia Pacific, where digital transformation efforts are intensifying.
Nearly half (48%) of respondents from financial and insurance firms reported experiencing at least one severe service disruption per week.
The median time to detect and resolve these incidents was found to be 42 and 58 minutes, respectively – figures above the cross-industry average. These delays contribute to the high cost of outages and have placed observability among the top digital priorities.
Nic Benders, chief technical strategist at New Relic, noted that financial services and insurance organisations are operating in complex digital environments where outages have significant operational and reputational consequences.
“These businesses grapple with frequent high-impact outages, complex tool sprawl, and mounting regulatory pressures – all while striving to deliver seamless digital experiences. The report’s findings demonstrate how critical observability is in helping businesses reduce costly downtime, leveraging AI, and modernising legacy systems to meet rising customer expectations while maintaining compliance. Observability is no longer just a technical practice; it is mission critical,” he said.
According to the report, AI is playing an expanding role in observability, with 41% of firms identifying AI implementation as a core driver of their digital monitoring strategies. Features such as automated root cause analysis and AI-assisted remediation are seen as key capabilities for reducing downtime.
Simon Lee (pictured), New Relic’s senior vice president and managing director for Asia Pacific and Japan, noted that firms in the region are moving quickly to modernise.
“AI-driven observability is giving early adopters the speed and clarity to stay ahead of issues, but too many organisations are still lagging. In a region where digital engagement is accelerating and downtime can instantly erode customer trust, organisations simply cannot afford to treat observability as optional. Strengthening digital resilience isn’t just about protecting the business – it’s about unlocking the confidence to innovate, grow, and lead into the future,” he said.
The report also showed that the sector leads in cloud-native development, with 36% of participants building cloud-first applications and 28% deploying containerised environments. Meanwhile, 42% of respondents said they aim to consolidate observability tools over the next year to streamline operations and enhance visibility.
Returns on observability investments are also notable. Respondents reported a median return on investment of 297%, attributing gains to improved system uptime, faster troubleshooting, and better end-user experience. Nearly half said observability contributed to increased uptime, while 42% cited improvements in operational efficiency.
Despite the benefits from tech advancements like AI, a recent consumer survey by research firm GlobalData has drawn attention to ongoing scepticism about the use of AI in insurance.
The survey – involving over 5,500 participants across 11 countries – found that although more than 70% of respondents believed AI improved service response times and pattern detection, many continue to raise concerns about fairness, data use, and trust.
GlobalData insurance analyst Beatriz Benito said that building trust will be crucial to broader AI adoption. She further noted that while automation offers efficiency in areas like claims handling and 24/7 service availability, there remains a consistent preference for human interaction in situations that require empathy or complex judgement.
