Insurance companies in Australia and New Zealand are increasingly adopting artificial intelligence (AI) and other advanced technologies to modernise operations and meet evolving market demands, according to the 2024 ISG Provider Lens Insurance Services report.
Released by technology advisory firm Information Services Group (ISG), the report highlighted key trends reshaping the insurance landscape, including economic pressures, climate-related risks, and rising consumer expectations.
The report identified digital transformation as a priority for insurers seeking to streamline processes, enhance regulatory compliance, and address challenges such as inflation and extreme weather-related claims. Growing competition from insurtech firms is also driving established insurers to innovate in customer service and product offerings.
Michael Gale, ISG partner and Asia Pacific lead, said that insurance companies in Australia and New Zealand need to move beyond legacy systems and cultures to remain competitive.
“Service providers are helping them make essential leaps in technology,” he said.
AI is increasingly being deployed to automate claims processing, improve customer engagement, and enhance risk management through predictive analytics.
The report suggested that these applications can reduce complexity in insurance products and optimize costs. However, achieving these benefits will require insurers to advance their capabilities in data collection and analysis.
P&C insurers in the region are applying data analytics to refine risk assessment and target customer segments more effectively. Insurers are also integrating digital and traditional service channels to provide a more personalised customer experience. Partnerships with insurtech companies are becoming a common strategy to accelerate innovation and improve operational efficiency.
L&R insurers, though serving a smaller portion of the market compared to P&C insurers, are increasingly outsourcing business processes to meet growing policyholder needs. Rising economic uncertainty is encouraging consumers to seek greater financial protection, contributing to increased demand for L&R insurance products.
Traditional IT outsourcing remains a significant expenditure for insurers in Australia and New Zealand. However, insurers are diversifying their strategies by incorporating nearshoring, offshoring, and insourcing models.
Cloud platforms are gaining prominence as insurers work to modernise their IT infrastructure and adopt Agile methodologies for faster project delivery.
Jan Erik Aase, ISG global leader for Provider Lens Research, said digital transformation for insurers in ANZ will require major investments in cloud, data management, and security.
“ITO service providers with expertise in these areas will be important partners in this process,” he said.
The report also stressed the importance of safeguarding intellectual property and implementing robust controls to prevent data leakage in AI-driven processes.