Unified Services Enable Insurance Innovation

Insurance enterprises are increasingly integrating AI into their operations to increase agility, personalization and operational excellence as they face multiple business challenges, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.

The 2025 ISG Provider Lens global Insurance Services — Strategic Capabilities (Insurance Services Specialists) report finds insurers reassessing their operating structures as they confront inflation, climate-related risks, cyber threats and the growing demands of digital-first consumers. Talent shortages and evolving regulations further increase the pressure for change. The transformation of insurance operations is influencing how companies collaborate with providers specializing in IT outsourcing (ITO) and business process outsourcing (BPO).

“Insurers around the world are rethinking how they deliver value amid rising uncertainty,” said Dennis Winkler, director, Insurance, at ISG. “They are turning to AI and other intelligent architectures that streamline operations and enhance performance under increasing cost and compliance pressures.”

Insurers are adopting modular AI systems that automate functions including triage, document processing and fraud detection, allowing them to use straight-through processing for routine work. As AI-driven automation increases, BPO providers are shifting the roles of human workers toward strategic oversight, exception management and roles in which empathy for customers is essential. This model helps insurers manage higher underwriting applications and claim volumes and maintain consistency as operational demands increase.

Cloud-native platforms are replacing traditional core systems in a growing number of insurance companies, ISG says. These platforms provide composable architectures that allow insurers to add new capabilities with minimal disruption. Enterprises are using API-first frameworks to integrate advanced analytics and real-time data sources into their workflows for underwriting and claims processing. Using this new foundation reduces technology costs, increases agility and enables continuous enhancement without extended transformation cycles.