By Shaji Sethu (pictured), Senior Vice President and Managing Director, Asia-Pacific, Guidewire
Insurance companies that aren’t investing in Artificial Intelligence (AI) will struggle to assess, price, manage, and augment risk with AI as effectively as their early-adopter counterparts, and will face challenges going forward.
Fundamentally, insurance is about quantifying as many of the ‘what ifs’ in life as possible. The optimum management of risk relies on accurate data coupled with sound professional judgment.
Today, the pressure on insurers to make the right calls is intense and increasing. Risk complexity is on the rise, loss patterns are becoming more unpredictable, and margins are under pressure as never before.
That means insurers that hope to remain sustainable and profitable need to be on their game – optimising their operations and enhancing the quality of the insights used to inform all aspects of the insurance process, from risk assessment to claims management.
Against this backdrop, digital and automation technology are more than mere tools. Smartly deployed, they can be strategic enablers and the source of significant competitive advantage.
Here are some of the IT trends Australian insurers should be aware of in 2026.
Getting granular about climate-related property risk
Climate-related losses are increasing around the world, and here in Australia, famously described by poet Dorothy Mackellar as ‘the land of droughts and flooding rain’. Such is the frequency, severity, and unpredictability of these and other extreme weather events, it’s no longer possible to capture the risks accurately by postcode, if indeed it ever was.
In 2026, the smart money is on going granular: using individual property-level hazard intelligence to make underwriting decisions that accurately reflect risks and price them accordingly. That calls for data that’s accurate, up-to-date, and at-the-fingertips accessible, from a multiplicity of sources.
Preventing the loss of critical human knowledge
Insurance is facing a significant demographic shift. Here in Australia, almost 30 per cent of the industry workforce will reach or exceed retirement age by 2030, according to the Insurance Council of Australia 2024 Insurance Industry Talent Roadmap.
This document highlights the importance of three things: supporting mature workers to remain in the industry; ensuring there’s a robust pipeline of younger people to take over in time; and putting mechanisms in place to transfer the skills and experience of senior employees to this fresh cohort of insurance professionals. It’s a challenge we can expect to see forward-focused insurers seeking to address with digital technology in 2026. Watch for the deployment of the latest-generation, dynamic knowledge management hubs that can capture and structure a vast range of organisational intelligence, from underwriting guidelines and claims playbooks to the institutional expertise and wisdom of long-time employees.
Swapping information silos for a joined-up operating model
The finance and insurance sectors have long been in the vanguard of technology adoption, and AI and automation were present in the backoffice long before the dawning of the ChatGPT era. However, these technologies were typically trialled as standalone pilots or used to optimise discrete business functions. No longer. This year, we’ll start to see ahead-of-the-curve insurers replacing information silos with data-driven, connected workflows that give employees in underwriting, pricing, claims, and operations departments greater visibility of activities – and the insights they need to make smarter decisions in real time.
Drawing on an interconnected ecosystem of innovative technologies
Integrating vast new data sources into the decision-making process is impossible in the absence of the right tools, and those tools can no longer be supplied and supported by a single vendor. That’s why we’ll see leading players looking to establish and augment interconnected ecosystems with best-of-breed insurtech solutions. It’s the smart way to gain rapid access to new capabilities while minimising the time and cost historically associated with developing and deploying bespoke programs.
Putting a powerful cloud-based property and casualty platform at the heart of operations
An AI-powered P&C insurance technology platform should sit at the heart of that ecosystem. Select the right one, and adding efficiency, rigour, and enhanced oversight to every aspect of the insurance process becomes a straightforward matter.
Whether it’s automating processes, streamlining workflows, facilitating secure digital communications with clients, or drawing on the power of data analytics, having this technology up and running in the back office will enable smarter, faster decision-making upon which sustainability and profitability depend.
