Insurance companies in Australia are turning to business process outsourcing (BPO) providers to overcome recent major challenges, meet changing consumer expectations and remain competitive, according to a new research report published today by Information Services Group (ISG) a leading global technology research and advisory firm.
“Insurance companies in Australia had an especially difficult year in 2022, on top of the upheavals occurring across the global insurance industry”
The 2022 ISG Provider Lens Insurance Services report for Australia finds that the nation’s insurers face competing pressures to fulfill escalating claims, control costs and modernize their technology for the digital consumer age. BPO providers play an important role in helping companies meet these needs, though growth in insurance BPO services has been soft in the last two years as both insurers and providers overcome disruptions caused by the COVID-19 pandemic.
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“Insurance companies in Australia had an especially difficult year in 2022, on top of the upheavals occurring across the global insurance industry,” said Jarrod Magill, director, ISG Australia. “Even so, they are initiating the kinds of changes needed to meet emerging requirements.”
Insurance claims soared in Australia in 2022 as a result of two major disasters, the report says. A flood across two states in February and March became the third-costliest weather event in Australian history, and the telecom company Optus was hacked in September, leading to 10 million customer records being breached and a wave of claims. This came after victims of cybersecurity incidents had reported losses of A$33 billion in 2020 and 2021.
At the same time, established insurance companies in Australia are being forced to revamp their technology and delivery models to meet the needs of customers that expect around-the-clock digital service and personalization, ISG says. Facing competition from digital-native insurtech startups that are transforming unwieldy traditional processes, insurers are modernizing customer experience using new types of data and analytical tools.
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Service providers are easing the strain on insurers with the resources to quickly respond to major events like the recent floods, ISG says. In a tight market for IT expertise, outsourcers can make available tens of thousands of professionals with insurance and digital technology experience. Insurers are beginning to outsource not just transactional functions but also high-skill processes such as underwriting. In addition, providers are expanding their services beyond traditional BPO to include strategy, consulting and digital transformation.
“Australian insurers need outsourcing and new technologies to meet current and future demands,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Together with service providers, they are preparing for fundamental change.”
The report also examines several other trends in the Australian insurance services industry, including the increasing use of outcome-based provider engagements and the role of AI and machine learning in important new capabilities.
The 2022 ISG Provider Lens Insurance Services report for Australia evaluates the capabilities of 15 providers across two quadrants: Life and Retirement Insurance BPO Services and Property and Casualty Insurance BPO Services.
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