ISG Survey Finds European Insurers Plan to Increase Digital Investments
February 06 2024 - 9:00AM
Business Wire
Majority of survey respondents look to
strengthen and expand their customer base with digital offerings
and personalization
Payment channels, AR/VR, AI and
cybersecurity are top investment areas
With the threat of recession still looming, two-thirds of
European insurance industry leaders plan to expedite their
digitalization programs to improve the customer journey and enhance
operational efficiencies, according to new survey research from
Information Services Group (ISG) (Nasdaq: III), a leading global
technology research and advisory firm.
The ISG "Pulse Check - State of the European Insurance Industry"
survey, conducted in the fourth quarter of 2023, surveyed nearly
270 business decision-makers and IT leaders in the European
insurance industry and found 66 percent plan to increase their
digital investments in the next two years, including 68 percent who
say they will invest in payment channels, 63 percent each in
cybersecurity and augmented and virtual reality, and 59 percent in
artificial intelligence.
Survey participants said their two main strategic priorities are
acquiring new customers, identified as a top priority by 85 percent
of respondents, and leveraging digital channels to develop new
business opportunities (74 percent). Increased investments in
digital offerings and personalized customer services will help
drive customer acquisition and retention, the ISG report noted.
"’Digital first’ is the focus as European insurers implement
next-generation technologies that promise the quickest return on
investment for their core businesses and to improve their market
position,” said Steve Hall, president of ISG EMEA and the firm’s
chief AI officer. "Process and decision automation and data
management will help create human-centered, technology-enabled
businesses that leverage rapidly evolving digital technology to
reshape work, lower costs and improve service. AI will undoubtedly
be an additional accelerator.”
The survey found demand for artificial intelligence (AI) is
experiencing particularly strong growth. Thirteen percent of
respondents report their annual budget for AI is already set at
more than €1 million, and six out of ten expect to receive
additional funding in 2024. Enterprises indicate they plan to
leverage large language models alongside established AI methods
such as natural language processing and machine learning.
AI development is still at an early stage for many respondents,
with half of companies (50 percent) experimenting with prototypes
and only 6 percent actively developing enterprise-wide AI
solutions. Eighteen percent of respondents say technologies such as
augmented reality (AR) and virtual reality (VR) are being used to
reduce business insurance losses through preventive
maintenance.
Ninety-one percent of respondents consider improving the
effectiveness of customer data management a critical investment
priority. Data silos remain a challenge, with only about one-fifth
of existing customer data being effectively utilized, according to
the ISG research.
Cybersecurity is another area of focus as enterprises
increasingly rely on digital infrastructure that may expose assets
to business interruption and cyber-attacks. Investments in digital
risk management will continue to increase, particularly in
cybersecurity and AI, to offer “customer trust” as a key
differentiator and meet increasing regulations. Sixty-three percent
of respondents expect their cybersecurity budgets to increase
between 2024 and 2026 in response to escalating risks and
regulatory demands.
"Insurers are prioritizing investments in AI, legacy
modernization and IT security. Strategic partnerships can increase
access to digital capabilities, process knowledge and specialized
talent while expanding market access and sharing development risk,”
Hall added. "The share of organizations that see consolidation of
their service provider portfolio as a top IT priority is growing
significantly, from 59 percent in 2022 to 93 percent in 2023.”
Striking a balance between insourcing and outsourcing is
critical given the evolving dynamics of the labor market and the
need to attract and retain IT talent, the report said. The percent
of survey respondents who plan to invest in insourcing (78 percent)
is almost the same as the number who plan to invest in outsourcing
(77 percent). Sixty-eight percent of decision-makers see improving
talent management as a pressing business imperative.
"As tech companies and insurtech startups become more attractive
employers for young, tech-savvy talent, traditional carriers are
challenged to attract and retain top talent," Hall concluded.
"High-quality talent management is becoming a critical factor in
meeting transformative technology demands."
The ISG "Pulse Check – State of European Insurance Industry
2024” report is available for download on this website.
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 automation, 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20240206423163/en/
Press:
Will Thoretz, ISG +1 203 517 3119 will.thoretz@isg-one.com
Philipp Jaensch, ISG +49 151 730 365 76
philipp.jaensch@isg-one.com
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