Downtime Pressures Mount for Financial and Insurance Firms
Financial services and insurance companies are facing escalating costs from IT outages, with an average loss of $3.4 million (US$2.2 million) per hour. This startling figure is driving firms to prioritize investments in observability and artificial intelligence (AI) to minimize downtime and strengthen operational resilience. The 2024 State of Observability for Financial Services and Insurance report by New Relic highlights how these technologies are becoming essential across the sector, especially in rapidly evolving markets like Asia Pacific.
Rising Cyber Threats and Service Disruptions
Nearly half (48%) of financial and insurance professionals surveyed reported experiencing at least one severe service disruption every week. On average, it takes 42 minutes to detect and 58 minutes to resolve these incidents—both times exceeding cross-industry standards. These delays not only increase outage costs but also underline why observability tools are climbing the list of digital priorities.
Nic Benders, chief technical strategist at New Relic, explains that financial and insurance organisations operate in complex digital environments where outages can cause serious operational setbacks and damage reputations. These companies face frequent high-impact outages, sprawling toolsets, and tightening regulations, all while needing to deliver smooth digital experiences.
Observability helps reduce costly downtime by providing real-time insights, enabling AI-driven problem-solving, and modernizing legacy systems. It has evolved from a technical support function to a mission-critical component of digital strategy.
The Expanding Role of AI in Observability
AI is increasingly integrated into observability strategies, with 41% of firms identifying it as a core element of their digital monitoring efforts. Automated root cause analysis and AI-assisted remediation are key features helping reduce downtime and accelerate incident resolution.
Simon Lee, New Relic’s senior vice president for Asia Pacific and Japan, highlights the urgency for firms in the region to modernize quickly. AI-driven observability provides early detection and clarity, helping organisations stay ahead of issues that could erode customer trust. For companies in fast-growing digital markets, observability is essential—not optional.
The report also shows the sector leading in cloud-native development, with 36% building cloud-first applications and 28% using containerized environments. Additionally, 42% plan to consolidate observability tools in the coming year to improve operational efficiency and visibility.
Investment returns are impressive. Firms report a median ROI of 297%, credited to improved system uptime, faster troubleshooting, and enhanced user experience. Almost half of respondents linked observability to increased uptime, and 42% saw gains in operational efficiency.
Consumer Scepticism Surrounding AI in Insurance
Despite technological advances, consumer trust remains a challenge. A GlobalData survey of over 5,500 people across 11 countries found that while more than 70% acknowledge AI’s benefits in speeding service and detecting patterns, many harbour concerns about fairness, data privacy, and trustworthiness.
Beatriz Benito, an insurance analyst at GlobalData, points out that building trust is vital for broader AI acceptance. Automation improves efficiency, especially in claims handling and round-the-clock service, but many consumers still prefer human interaction for empathetic or complex decisions.
Key Takeaways for Insurance Professionals
- Downtime in financial and insurance firms is costly and frequent, making observability essential for survival.
- Effective observability requires integrating AI to accelerate detection and resolution of issues.
- Cloud-native and containerized environments are becoming standard, demanding streamlined observability tools.
- Despite AI’s operational benefits, consumer trust and transparency must be addressed for successful adoption.
For insurance professionals, investing in observability and AI isn’t just about reducing outages—it’s about building resilient systems that support customer trust and business growth. More details on best practices for observability can be found at Gartner's observability glossary.
Understanding consumer concerns around AI is equally important. The EY report on AI in insurance provides insights into balancing automation with human touch.
Your membership also unlocks:
