Insurance companies in Australia and New Zealand are driving investment into new technologies including AI to become data-driven organisations according to a new report.
The new report published by global technology research and advisory firm Information Services Group said, “Insurance companies in Australia and New Zealand need to move beyond legacy systems and cultures to remain competitive.”
The 2024 ISG Provider Lens Insurance Services report for Australia and New Zealand revealed 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.
ISG Asia Pacific partner and head Michael Gale said, “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.”
According to the report 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 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. To improve and personalise 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.
ISG said, “Life and retirement insurers are also turning to BPO providers to meet evolving policyholder demands. 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.