Insurance companies in North America are increasingly adopting new technologies, including artificial intelligence (AI) and automation, to address market volatility and evolving customer demands, according to a new report by Information Services Group (ISG).
According to the 2024 ISG Provider Lens Insurance Services, AI plays an increasing role in helping insurers analyze large volumes of data to improve decision-making. However, it said many North American insurers are still in the early stages of data modernization, lagging insurers in markets such as Asia.
The ISG report highlights the industry's struggle with rising costs, changing customer expectations, and shrinking profit margins. As insurers face mounting pressures, property and casualty (P&C) firms are contending with growing claims from natural disasters, while life and retirement (L&R) companies are grappling with low interest rates and economic uncertainty.
Adaptability is identified as a critical factor for survival. ISG notes that insurers who had already implemented digital transformations before the COVID-19 pandemic could quickly transition to online platforms and remote work, gaining a competitive edge. Today, insurers continue to leverage AI and automation to improve operational efficiency and enhance the policyholder experience.
“The leading North American insurance companies are distinguishing themselves through aggressive automation, AI, digital and business innovation,” said Dennis Winkler, Americas leader for insurance at ISG. “Those that resist change risk losing market share and becoming obsolete.”
The report also revealed that many insurers in North America are modernizing their core systems, such as underwriting and billing, which are often based on outdated technology. These systems, some decades old, no longer meet the demands of modern consumers or the technical requirements of today's market. ISG emphasizes that these upgrades are long-term projects that require significant preparation.
In addition to core platform updates, insurers are modernizing supporting systems like accounting and customer relationship management. This complex process requires a carefully planned strategy to avoid gaps in a company’s capabilities.
Insurers are increasingly turning to strategic consulting firms to assist with these efforts, with many preferring engagements where providers share responsibility for business outcomes.
The report also highlights the role of new technologies in enhancing customer experience. Traditional insurers are working to develop personalized, omnichannel customer support systems to meet the demands of modern consumers and compete with cloud-native startups. Partnerships with business process outsourcing and third-party administrator providers are helping insurers better serve customers.
“Investing in advanced technology and services enables insurance companies to meet and exceed evolving market expectations,” said Jan Erik Aase, partner and global leader of ISG Provider Lens Research. “It can set them up to thrive in the near term and grow and adapt in the long term.”
The 2024 ISG Provider Lens Insurance Services report evaluated the capabilities of 67 providers across five quadrants: life and retirement insurance BPO services, property and casualty insurance BPO services, life and retirement insurance TPA services, insurance ITO services and insurance ITO services for midmarket and midmarket next-gen companies.
Among the leading providers, Accenture, Cognizant and EXL were named leaders in four quadrants each, while Genpact, Infosys TCS and WNS were named leaders in three quadrants each. Meanwhile, Sutherland was named a rising star in two quadrants, along with EPAM, Patra Corporation, Teleperformance and Virtusa.
