Digital Engineering Reshapes Insurance Operations, Innovation
Insurers are modernizing technology foundations to improve speed, efficiency, policyholder experience, ISG Provider Lens® report says
Incumbent insurance companies are adopting digital engineering to replace legacy systems with modern platforms that enable faster product delivery and improved policyholder engagement, 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 Digital Engineering Services) report finds that insurers are contending with technology foundations built over decades that incur rising maintenance costs, restrict integration of analytics and AI and slow the introduction of new products. Many carriers are investing in modernization to reverse stagnant premium growth and address declining policyholder satisfaction that may be caused by fragmented channels and outdated tools.
"Digital engineering has become essential to insurance industry transformation," said Dennis Winkler, director, Insurance, at ISG. "Incumbent insurers need modern architectures, development methods and organizational structures to compete with digital-first challengers. Digital engineering is the core capability for succeeding in that transition."
Insurers are upgrading core systems with cloud-native platforms that improve agility and reduce operating friction, the report says. Many are replacing older systems for policy administration and claims or refactoring components to overcome their dependence on mainframes. These upgrades allow for phased transitions that reduce operational risk while improving the speed of service delivery. Carriers that adopt modern platforms report better alignment between business and technical teams and more consistent product updates in response to market and regulatory changes.
Modernization efforts increasingly rely on API-first integration to unify data and streamline interactions across applications and channels, ISG says. Insurers are implementing API strategies that turn functions such as quoting, binding and claims filing into reusable services. These services enable seamless handoffs between digital and agent-supported touchpoints, reducing friction for policyholders and improving transaction accuracy. Integration platforms are helping carriers coordinate workflows across multiple systems without compromising data integrity.
By adopting cloud infrastructure and DevOps practices, insurers are also tightening up development cycles, the report says. Elastic compute services reduce operational overhead while providing secure environments for regulated workloads. DevOps methods, including automated testing and continuous integration and continuous delivery (CI/CD), allow teams to update software in less time and ensure consistent quality. These capabilities help insurers respond to regulatory requirements and competitive pressures without lengthy development efforts.
"Insurers that invest in strong engineering foundations improve speed, stability and customer outcomes," said Ashish Jhajharia, lead author of the report. "Service providers play key roles in helping enterprises adopt these methods at scale."
The report also explores other trends in digital engineering for insurance, including the increasing importance of unified data environments for analytics and the need for stronger resilience engineering across modern architectures.
For more insights into the technology-related challenges faced by insurance enterprises, plus ISG's advice for overcoming them, see the ISG Provider Lens® Focal Points briefing here.
The 2025 ISG Provider Lens® global Insurance Services ― Strategic Capabilities (Insurance Digital Engineering Services) report evaluates the capabilities of 20 providers in one quadrant: Insurance Digital Engineering Services.
The report names Atos, Capgemini, Cognizant, HCLTech, Infosys, LTIMindtree, Persistent Systems and Tech Mahindra as Leaders in the quadrant.
In addition, Coforge and ValueMomentum are named as Rising Stars — companies with a "promising portfolio" and "high future potential" by ISG's definition — in the quadrant.
In the area of customer experience, Sutherland is named the global ISG CX Star Performer for 2025 among insurance industry services providers. Sutherland earned the highest customer satisfaction scores in ISG's Voice of the Customer survey, part of the ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.
Customized versions of the report are available from Coforge and ValueMomentum.
The 2025 ISG Provider Lens® global Insurance Services ― Strategic Capabilities (Insurance Digital Engineering Services) report is available to subscribers or for one-time purchase on this webpage.
About ISG Provider Lens® Research
The ISG Provider Lens® Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Mexico, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.
About ISG
ISG (Nasdaq: III) is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world's top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data, in-depth knowledge of provider ecosystems, and the expertise of its 1,600 professionals worldwide working together to help clients maximize the value of their technology investments.
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