EUROPE: European insurance industry accelerates digitalisation efforts amid recession concerns

In response to the looming threat of recession, European insurance industry leaders are doubling down on their digitalisation initiatives to enhance customer experiences and streamline operations, according to a recent survey conducted by Information Services Group (ISG).

The survey, titled “Pulse Check – State of the European Insurance Industry,” conducted in the fourth quarter of 2023, polled nearly 270 business decision-makers and IT leaders in the European insurance sector.

Results revealed that two-thirds of respondents are planning to expedite their digital investments over the next two years, with a focus on improving payment channels, cybersecurity, augmented and virtual reality, and artificial intelligence (AI).

Key strategic priorities identified by survey participants include acquiring new customers and leveraging digital channels to explore new business opportunities.

The emphasis on digital offerings and personalised services aims to drive customer acquisition and retention in an increasingly competitive landscape.

Steve Hall, President of ISG EMEA and Chief AI Officer, highlighted the shift towards a “digital first” approach among European insurers, emphasising the role of next-generation technologies in reshaping business operations and improving market positioning.

AI, in particular, is experiencing significant growth, with a notable increase in budget allocations and a focus on leveraging advanced AI methods such as natural language processing and machine learning.

Despite the growing interest in AI, the survey noted that AI development is still in its early stages for many respondents, with only a fraction actively developing enterprise-wide solutions.

Additionally, challenges such as data silos and cybersecurity remain areas of concern, prompting increased investments in digital risk management and IT security.

Strategic partnerships are seen as vital for accessing digital capabilities and specialised talent while mitigating development risks.

Furthermore, insurers are striving to strike a balance between insourcing and outsourcing to address evolving labor market dynamics and talent retention challenges.

As traditional carriers face competition from tech companies and insurtech startups for top talent, effective talent management strategies are becoming increasingly crucial in meeting the demands of transformative technologies.