Insurance Industry Rethinks Strategy to Combat Climate Change and Competition, Says ISG Provider Lens™ Report
Insurance companies in North America are rapidly adopting advanced technologies, including AI, to thrive in a challenging market, according to the latest report from Information Services Group (ISG) III, a prominent global technology research and advisory firm.
The 2024 ISG Provider Lens™ Insurance Services report highlights that the insurance sector is facing rising expenses, shifting consumer expectations, and shrinking profit margins. Property and casualty (P&C) insurers are under pressure to manage increasing claims from severe natural disasters, while life and retirement (L&R) insurers are struggling with declining interest rates and economic instability.
ISG stresses that adaptability is crucial for survival. During the COVID-19 pandemic, insurers that embraced digital transformation quickly shifted to online services and remote operations, gaining a competitive edge. Today, innovative insurers are integrating technologies like AI and automation to enhance efficiency, profitability, and the overall experience for policyholders.
“The top insurance companies in North America are standing out through significant investments in automation, AI, and digital innovation,” stated Dennis Winkler, Americas leader for Insurance at ISG. “Companies that are slow to change might face the risk of losing market share and becoming irrelevant.”
Most insurers are in the process of upgrading their core systems, which include critical functions like underwriting and billing, ISG reports. Many of these systems are outdated, having been developed during times when technology and consumer needs evolved at a slower pace. While technology providers can assist in these transitions, the process is often lengthy and requires careful planning.
In addition to core systems, firms are also updating essential functions such as accounting and customer relationship management. This update can be quite complex and necessitates a comprehensive ecosystem strategy to avoid gaps in capabilities. Insurers address these challenges by collaborating with strategic consulting firms, often emphasizing shared accountability for business outcomes.
Insurance companies are now beginning to implement AI to extract insights from vast amounts of data, helping them make better decisions. ISG notes that this process usually involves large-scale data modernization projects that focus on organizing and utilizing relevant information. Most North American firms are still in the early stages of this journey, lagging behind newer insurers in regions like Asia.
Technological advancements are significantly enhancing customer experience, the report indicates. Traditional insurers are developing personalized, omnichannel support systems to meet modern customers’ needs and compete with agile startups. By partnering with business process outsourcing and third-party administrator (TPA) providers, insurers can better address consumer demands.
“Investing in cutting-edge technology and services allows insurance firms to meet and exceed the changing market expectations,” comments Jan Erik Aase, partner and global leader of ISG Provider Lens Research. “Such investments not only prepare them for immediate challenges but also position them for long-term growth and adaptability.”
The report also examines other trends in the North American insurance landscape, including the effects of tightening regulations and the increased use of straight-through processing to expedite claims resolution.
For further insights on the challenges facing North American insurance companies, including profitability and business model transformation, access the ISG Provider Lens™ Focal Points briefing here.
The 2024 ISG Provider Lens™ Insurance Services report for North America analyzes the capabilities of 67 service providers across five quadrants: Life and Retirement (L&R) Insurance BPO Services, Property and Casualty (P&C) Insurance BPO Services, Life and Retirement (L&R) Insurance TPA Services, Insurance ITO Services, and Insurance ITO Services — Midmarket.
Recognized as Leaders in four quadrants are Accenture, Cognizant, and EXL. Genpact, Infosys, TCS, and WNS are Leaders in three quadrants each, while DXC Technology, NTT DATA, Tech Mahindra, and Wipro are recognized in two quadrants each. Capgemini, Coforge, Davies Group, Ensono, EPAM, Fujitsu, GFT, HCLTech, Hexaware, HTC Global Services, Illumifin, Iron Mountain, Kyndryl, LTIMindtree, Mphasis, Persistent Systems, Publicis Sapient, Randstad Digital, ReSource Pro, Sutherland, Unisys, Xceedance, Zensar Technologies, and Zinnia are Leaders in one quadrant each.
Sutherland is identified as a Rising Star, a company regarded as having a “promising portfolio” and “high future potential” in two quadrants. EPAM, Patra Corporation, Teleperformance, and Virtusa are also recognized as Rising Stars in one quadrant each.
In customer experience, Persistent Systems has been distinguished as the global ISG CX Star Performer for 2024 among Insurance Services providers, achieving the highest customer satisfaction scores in ISG’s Voice of the Customer survey, an essential part of the ISG Star of Excellence™ program, the premier quality recognition in technology and business services.
Customized versions of the report are available for purchase from Sutherland and WNS.
The 2024 ISG Provider Lens™ Insurance Services report for North America can be accessed by subscribers or purchased as a one-time download on this webpage.
About ISG Provider Lens™ Research
The ISG Provider Lens™ Quadrant research series is distinct in combining empirical research and market analysis with insights from ISG’s global advisory team. Enterprises will discover extensive data and market evaluations to aid in selecting suitable sourcing partners. ISG advisors utilize these reports to enrich their market knowledge and guide ISG’s enterprise clients. Research currently covers service providers globally, including markets across Europe and the U.S., Canada, Mexico, Brazil, the U.K., France, Benelux, Germany, Switzerland, Nordics, Australia, and Singapore/Malaysia, with plans to expand to additional regions. For more information on ISG Provider Lens research, please visit this webpage.
About ISG
ISG (Information Services Group) III is a leading global technology research and advisory firm, serving over 900 clients, including 75 of the top 100 enterprises worldwide. ISG is dedicated to assisting corporations, public sector bodies, and service and technology providers in attaining operational excellence and sustainable growth. The firm specializes in digital transformation services, such as AI, cloud computing, and data analytics; sourcing advisory; risk management; carrier services; operational strategy; and market intelligence. Founded in 2006 and headquartered in Stamford, Connecticut, ISG employs over 1,600 professionals across more than 20 countries, known for their innovative thinking and deep industry expertise. For more details, visit www.isg-one.com.
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Press:
Will Thoretz, ISG
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Julianna Sheridan, Matter Communications for ISG
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