Companies across Australia and New Zealand are outpacing global counterparts in the adoption of generative artificial intelligence (GenAI).
However, insurers in the region are confronting rising implementation costs and consumer scepticism, according to recent studies.
New findings from Snowflake, in collaboration with the Enterprise Strategy Group, have shown that ANZ firms are more likely to dedicate a substantial portion of their technology budgets to GenAI than the global average.
Of those surveyed, 32% of organisations in ANZ are committing over 25% of their tech funding to GenAI development, compared to 25% globally.
These businesses are also reporting marginally higher returns on GenAI investments. ANZ respondents indicated a 44% return on investment, versus a global average of 41%. A significant number of early adopters – 91% in ANZ compared to 84% globally – said the technology is helping them make faster and more informed decisions.
According to Theo Hourmouzis (pictured), senior regional vice president for ANZ and ASEAN at Snowflake, these trends suggest organisations are looking to GenAI as a strategic lever.
“Local organisations are funding GenAI at a rate above the global average, which bodes well for the development and growth of AI in our region,” he said. “While there is a clear appetite and drive to be ahead of the AI curve, there are hurdles that local business and IT leaders are at pains to overcome – the two biggest challenges being talent and data.”
A customer-centric approach appears to be a dominant theme. Over half of the organisations surveyed in ANZ reported prioritising customer-facing GenAI applications, such as personalisation and customer engagement tools, more than internal-facing tools for employees.
“Improving the customer experience is where local organisations are focusing their GenAI strategy and for many businesses this is providing clear benefits already,” Hourmouzis said.
Despite enthusiasm and funding, GenAI adoption in the insurance and broader business sectors is facing headwinds.
The report found that ANZ organisations are more frequently dealing with unexpected project costs, particularly related to hiring and onboarding AI talent. Roughly 63% of respondents said staffing costs exceeded initial estimates, compared to 48% worldwide.
In addition, companies are experiencing challenges in managing and preparing data. Local respondents were more likely than their global peers to report issues such as fragmented data systems and time-intensive data management tasks.
Hourmouzis noted that these are growing pains typical of a new technology cycle.
“It’s important to note that the industry is still in the relative infancy of AI adoption,” he said. “These challenges, including the talent issue, will look like a drop in the ocean 10, 20, and 30 years from now once AI evolves into a normal, everyday part of our business lives.”
At the same time, a separate survey by GlobalData highlighted lingering consumer doubts about AI's role in the insurance sector, despite positive feedback from users who have interacted with AI-driven services like chatbots.
The survey of more than 5,500 consumers across 11 countries, including Australia and New Zealand, found that while many recognised benefits – such as improved response times and operational efficiency – trust remains an issue. Concerns focused on data privacy, transparency, and the perceived fairness of AI-driven decisions.
Although AI tools offer the promise of around-the-clock support and faster claims processing, industry experts suggest human involvement will remain essential in complex or sensitive scenarios.
Beatriz Benito, lead insurance analyst at GlobalData, said AI can help streamline processes, but customer-facing roles will continue to require human judgment.
“While all in all, AI has the potential of considerably improving satisfaction rates in insurance, the need for the human touch and empathy in engagements continue to limit its full potential. Better communication surrounding AI’s capabilities and nuances will ultimately lead to improved adoption rates,” she said.
