AI Transforming European Insurance Industry -- ISG

An unpredictable global environment and advancing AI and intelligent technologies are driving fundamental shifts in the risk landscape and insurers’ relationships with clients and regulators in Europe, says a new research report from Information Services Group (ISG), a leading global technology research and advisory firm.

Thorsten Stüwe, EMEA director, ISG Insurance.

The 2024 ISG Provider Lens™ Insurance Services report for Europe says new AI-powered tools can tackle existing and emerging challenges across the insurance value chain. Enterprises are increasingly adopting solutions to streamline their operations, enhance service delivery and ensure compliance with new regulations.

“The residual effects of COVID-19 and the ongoing global climate crisis are contributing to a rapidly evolving risk landscape and disrupting well-established actuarial models,” said Thorsten Stüwe, EMEA director, ISG Insurance. “The economic impacts of these forces are also affecting how much consumers and businesses can spend on insurance products. Insurance providers are now beginning to assess the strategy shifts these forces will effect.”

The report says AI has evolved from a speculative concept into a transformative force in insurance, with applications such as data-driven agent profiling, predictive health analytics and advanced fraud detection techniques. Service providers are offering more specialized solutions to meet the evolving demand for personalization and integrating advanced technologies such as AI/ML to improve claims processing, policy administration and customer service.

For the European market, service providers are focusing on more data-driven decision-making and predictive analytics services and helping insurance firms transform their business process outsourcing into digitized operations to improve customer experience throughout the insurance service lifecycle.

While managed services and application data management remain significant components of insurance enterprise IT budgets, the ISG research says IT outsourcing providers are expanding their portfolios into system integration, IT advisory services and business consulting and leveraging cutting-edge digital technologies, including conversational AI, to improve customer engagement.

“Customer experience and innovation have emerged as key competitive differentiators in the insurance industry,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Strategic provider partners can create immense value by delivering next-generation technologies, innovative business processes and insurance domain capabilities that enable cost-effective and sustainable growth.”

The report also explores the need for insurance leaders to comprehensively evaluate their current organizational posture. To effectively leverage AI’s vast potential, insurers should establish scalable AI infrastructures, encourage collaboration between data science and actuarial teams and uphold a culture of continuous innovation.

To learn more, visit: www.isg.com