Consultancy firm Sollers says the impacts of high reinsurance costs and claims inflation will see many insurers “redefine” their business models with the adoption of new technologies.  

The firm released its prediction report for the upcoming year, themed “Against the Wind,” and expects the industry to prioritise operational efficiency to help contend with increased pressure from rising reinsurance costs and interest rates.   

“As inflation will persist for a long time, insurance companies will take measures to become more flexible, especially in pricing and claims handling,” Sollers said. 

“It is likely that there will be far-reaching improvements on the operational side. This will help the industry to improve its ability to cope with large claims, which are occurring with increasing frequency.” 

Sollers predicts the industry will look to reinforce its data with cloud technology businesses, which grew by more than 20% this year, with dominant trends expected from US, Australian, and UK businesses.  

“As governments and public organisations migrate to the cloud, insurers will abandon their reluctance,” Sollers said.  

“This will be supported by healthy competition among cloud providers, which will increase the attractiveness of their offerings.”  

For Australia, Sollers says the push from local insurers will be motivated by a focus on cost efficiency and reducing maintenance efforts.  

“IT activities in the Australian insurance industry will focus on the adoption of cloud solutions,” Sollers said.  

“Large insurers will migrate their self-managed core systems to reduce infrastructure maintenance efforts and achieve greater scalability. As part of this effort, data management will play an important role.” 

Artificial Intelligence (AI) is also expected to hold a significant role in the coming year, with the report noting its “immense potential” in several areas, including underwriting, claims processing, customer service, asset management, and marketing.   

“Artificial intelligence is about to fundamentally change the insurance business,” Sollers Chief Sales Officer Niels Zijderveld said, “But to utilise it, insurers need to invest in their IT infrastructure.”  

“Insurance companies will expand their strategies to reduce claims costs and focus on cost-efficient models through automated distribution and underwriting.”   

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