Outsourcing and technology providers are helping European insurance companies to modernise amid rising challenges, according to a recent Information Services Group (ISG) report.
European insurers are facing macroeconomic conditions, new market risks and changing customer demands. As a result, they are seeking more agile, tech-savvy approaches to business, analysts state.
They are looking to modernise their legacy systems to restrain the effects of new competitive pressures and rising costs. Many of them, the report revealed, are turning to service providers that have the required digital IT skills and industry experience to help them transform their business models.
Anna Medkouri, partner and insurance industry lead for ISG EMEA, said: “Insurance companies are willing to form long-term, mutually beneficial relationships with service providers.
“These strategic partners can create immense value by applying IT, business process and insurance domain capabilities to business transformation, often with a relatively quick turnaround time.”
The report also found that Europe’s insurers are facing a new world of developing risk and uncertainty due to a number of recent trends. These include inflation and increasing interest rates, which are impacting demand.
Adding to these is growing regulatory pressure, which is increasing the cost of doing business and rising cybersecurity and climate risks. As well as technology, which is changing customer expectations.
This combination, ISG analysts note, underscores the need for insurers to create more effective risk-modelling, pricing methods and innovative products.
Although the combined threats and market changes may seem to paint a bleak picture for Europe’s insurance industry, insurers in the region have viable options for coping with these concerns, the ISG report says.
“With the aid of providers, they may swiftly embrace new technologies, re-evaluate old ways of doing business, increase cooperation and efficiency and pursue innovations to meet customer needs and company goals,” the research and advisory firm states.
Jan Erik Aase, partner and global leader, ISG Provider Lens Research, highlights: “The outdated infrastructure and legacy systems that many European insurers rely on contain hidden costs that have a direct impact on their bottom line.
“Insurers need to prioritise next-generation technologies that stimulate innovation and streamline internal operations to increase profitability.”
The 2023 ISG Provider Lens™ Insurance Services report for Europe also examined how replacing obsolete IT infrastructure with more sophisticated technology can assist insurers in addressing growing risks to data security.
It evaluated the capabilities of 36 providers across three quadrants: Life and Retirement (L&R) Insurance BPO Services, Property and Casualty (P&C) Insurance BPO Services and Insurance ITO Services.
Accenture, Cognizant and TCS were named Leaders in all three quadrants, while Genpact and WNS were named as Leaders in two quadrants each. Atos, Capgemini, EXL, HCLTech, Infosys, NTT DATA, Tech Mahindra and Wipro are named Leaders in one quadrant each.
Additionally, HCLTech, Hexaware and Sutherland were named as Rising Stars – companies that ISG defines to have a “promising portfolio” and “high future potential” – in one quadrant each.
