Australia’s stringent regulations present hurdles for insurers.
The global insurance software market is forecasted to increase by $7.53 billion, with a compound annual growth rate (CAGR) of 7.81% from 2024 to 2028, according to a report by Technavio.
This projected growth is largely driven by increasing government regulations in developing countries, which require insurance coverage and push insurers to adopt advanced software solutions for compliance purposes.
A key factor contributing to market expansion is the integration of wearable technology into life insurance, allowing for more personalized services. Additionally, the insurance software market is experiencing heightened demand for comprehensive cybersecurity solutions to mitigate fraud and address cybersecurity threats.
However, the market faces significant challenges due to strict regulations imposed by bodies such as the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), and the National Association of Insurance Commissioners (NAIC) in the United States. These regulatory bodies are establishing and enforcing stricter rules, with the NAIC’s Own Risk and Solvency Assessment (ORSA) adding further requirements for insurers. The necessity to update offerings to ensure compliance with these regulations poses obstacles to market growth.
The digital transformation of the insurance industry introduces additional operational costs, complexity, and integration challenges with existing legacy systems. Cybersecurity remains a major concern, necessitating robust solutions to protect against cyberattacks and other threats.
Advanced risk assessment tools and regulatory compliance are crucial for providing comprehensive coverage, policies, and pricing models. Scalability and flexibility are essential for adapting to the evolving insurance landscape, with cloud technology playing a vital role in meeting demands and managing policy and claims processing.
As the market continues to evolve, insurers will need to navigate these regulatory challenges while leveraging technological advancements to drive growth and improve service delivery.
