North American Insurers Transform Systems, Adopt AI for Adaptability

Business Wire

Established companies modernize software, data management to stay relevant as climate change, new competitors shake up business models, ISG Provider Lens™ report says

STAMFORD, Conn.--(BUSINESS WIRE)--
Insurance enterprises in North America are integrating new technologies, including AI, to succeed in an unpredictable, rapidly changing market, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2024 ISG Provider Lens™ Insurance Services report for North America finds that the industry is grappling with rising costs, changing customer expectations and shrinking profit margins. Property and casualty (P&C) insurers need to cover growing claims from increasingly severe natural disasters, while life and retirement (L&R) firms face falling interest rates and economic uncertainty.

Adaptability is key to survival, ISG says. During the COVID-19 pandemic, insurance companies that had carried out digital transformations swiftly adopted online platforms and remote work, gaining advantages over rivals. Forward-thinking insurers today are using technologies including AI and automation to improve efficiency, profitability and policyholder experience.

“The leading North American insurance companies are distinguishing themselves through aggressive automation, AI, digital and business innovation,” said Dennis Winkler, Americas leader, Insurance, with ISG. “Those that resist change risk losing market share and becoming obsolete.”

Most insurers in the region are replacing the systems they use for core insurance functions, such as underwriting and billing, or exploring how best to do so, ISG says. Many of these platforms are decades old, dating from a time when technical requirements and consumer demands changed more slowly. Providers can help clients migrate, but the change is a long-term project that requires extensive preparation.

Along with their core platforms, companies are updating supporting systems for functions such as accounting and customer relationship management, ISG says. This can be a complex undertaking itself, requiring the right ecosystem strategy to ensure there are no gaps in a company’s capabilities. Insurers are addressing this need by working with strategic consulting firms, preferring engagements that place some accountability on the provider for business outcomes.

Insurance companies are beginning to use AI to derive new insights and better decision-making from huge volumes of data, ISG says. This typically requires massive data modernization projects to identify relevant information and make it usable. Most North American firms are at the early stages of this process, still behind newer insurers in other markets, such as Asia.

New technologies are playing a major role in improving customer experience, the report says. Traditional insurance companies are building out personalized, omnichannel customer support systems to meet modern customer expectations and compete with cloud-native startups. Partnerships with business process outsourcing and third-party administrator (TPA) providers help insurers efficiently serve consumers’ needs.

“Investing in advanced technology and services enables insurance companies to meet and exceed evolving market expectations,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “It can set them up to thrive in the near term and grow and adapt in the long term.”

The report also explores other trends in the North American insurance industry, including the impact of increasing regulation and the growing use of straight-through processing to settle claims faster.

For more insights into the challenges facing insurance companies in North America, including maintaining profitability and reinventing business models, see the ISG Provider Lens™ Focal Points briefing here.

The 2024 ISG Provider Lens™ Insurance Services report for North America evaluates the capabilities of 67 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, Insurance ITO Services — Midmarket and Insurance ITO Services — Midmarket Next-gen.

The report names Accenture, Cognizant and EXL as Leaders in four quadrants each. It names Genpact, Infosys, TCS and WNS as Leaders in three quadrants each and DXC Technology, NTT DATA, Tech Mahindra and Wipro as Leaders 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 named as Leaders in one quadrant each.

In addition, Sutherland is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in two quadrants. EPAM, Patra Corporation, Teleperformance and Virtusa are named as Rising Stars in one quadrant each.

In the area of customer experience, Persistent system is named the global ISG CX Star Performer for 2024 among Insurance Services providers. Persistent system earned the highest customer satisfaction scores in ISG's Voice of the Customer survey, part of the ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.

Customized versions of the report are available from Sutherland and WNS.

The 2024 ISG Provider Lens™ Insurance Services report for North America is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Mexico, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including AI, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.