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Blog » How Outsourcing Can Upgrade your Insurance Business?

How Outsourcing Can Upgrade your Insurance Business?

Last updated: 09 Jul, 2024 By | 6 Minutes Read

Insurance Business

According to Facts and Factors , “The global insurance business process outsourcing market size was worth USD 5,924.10 million in 2021 and is estimated to grow to USD 9826.42 million by 2028, with a compound annual growth rate (CAGR) of approximately 8.80% over the forecast period.”

It is evident that the insurance outsourcing industry is witnessing rapid growth. Veterans in the industry tell tales of its remarkable transformation through the past few decades. It had taken off with the imperative to reduce operational costs. Labor and overheads had become areas of concern. Outsourcing helped insurance businesses to reign them in. With their basic insurance processes outsourced to low-cost countries, companies succeeded in achieving savings targets almost overnight.

Within a few years, confidence in outsourcing grew. Insurers, witnessing sustained improvements in their income statements, were emboldened to look at the next level of processes that could be outsourced without causing the business any harm. On their part, insurance business process providers, too, were ready for the next level of processes. The trend that has thus started, went on to become more matured and sophisticated through the years. Advancements in technology, increased regulatory complexities, and a heightened emphasis on data analytics, risk management and compliance, rule insurance outsourcing decisions today. It has become an indispensable element in the industry’s pursuit of innovation, efficiency, and sustained growth.

Advantages of outsourcing to insurance BPM service providers

Considering insurance process outsourcing is close to a three-decade industry, the usual advantages of outsourcing have been well-established and reaped. They include cost arbitrage, efficiency across functions, access to domain skills, increased productivity, and flexibility etc. Today, the advantages of insurance outsourcing touch a new sphere. They have entered a specialized phase and include significant modern-day imperatives.

Let us access few of these new-age advantages:

Rapid innovation and technology adoption:

Insurance BPM partners, gauging market needs, have ventured into the exploration of cutting-edge technologies that bring additional process enhancements. These technologies include artificial intelligence, machine learning, robotic process automation, and data analytics. They are already playing a big role helping insurance clients transform their processes through greater agility, customer attention and scalability. Most insurers will not have in-house capabilities to track latest tech developments and employ them into their processes. Outsourcing serves them best to counter these situations

Repository of customer-centric solutions:

As a result of the constant tech upgrades that insurance BPM companies invest in, they have access to swathes of customer data. Leveraging these customer insights and data analytics models, these service providers have built capabilities to create targeted customer-centric solutions. Insurers, therefore, stand a great chance to improve the overall experience of their customers by outsourcing. Additionally, they can offer enhanced personalized services, faster response times to inquiries etc with the help of their outsourcing partners

Ready security of data and compliance enabler:

Since the world has moved to cyber-space, customer data protection and overall regulatory compliance has assumed heightened importance. In this scenario too, outsourcing partners have been well-placed to pivot and broaden their offerings. Most insurance BPM providers are investing in robust cybersecurity measures. They are also ensuring compliance with regulatory requirements for their clients

Optimization and transformation machinery:

Reputed outsourcing providers have deep domain backgrounds and perspective to business processes. These give them the foundation to redesign and optimize workflows, drive process improvements and overall business transformation

Opportunity to build agile and scalable operations:

The speed of market disruptions have increased by leaps and bounds. BPM partners are enabling insurance companies to keep pace with rapid market changes. They are also building strength and agility into processes so that the functions can scale operations as needed. Outsourcing is making insurers more competitive in the face of evolving industry trends

Advanced analytics for risk management:

The use of advanced analytics and predictive modelling by outsourcing partners have been on the rise. With these, they are helping their client manage risks far more effectively than has been traditionally possible. Outsourcing partners are helping with risk identification, fraud detection; they are improving underwriting accuracy. These, in turn, are helping insurers build effective risk mitigation strategies

Understanding of global regulatory requirements:

Insurance process outsourcing allows companies to leverage the global regulatory expertise of outsourcing partners. As regulations evolve across different regions, outsourcing providers can help navigate complex compliance requirements and ensure adherence to international standards

Enabler of ecosystem collaboration:

Outsourcing partnerships is facilitating collaboration within broader ecosystems. There have been stakeholder integration across insurtech firms, technology providers, and regulatory bodies. This is fast creating a seamless and interconnected insurance ecosystem

Environmental, Social, and Governance (ESG) compliances:

The growing emphasis on ESG factors in the business world has extended to the insurance industry. Outsourcing partners are contributing to ESG goals by implementing sustainable practices, ethical sourcing, and social responsibility initiatives

What insurance services and processes can you outsource?

  • Claims processing
  • Policy administration
  • Underwriting support
  • Premium collection and billing
  • Data entry and management
  • Actuarial services

How to choose a BPM service provider for an insurance company?

Choosing the right BPM service provider requires deliberate strategy on the part of the insurance company. The basic guideline is as follows – look for service providers with:

  • Deep insurance domain and understanding of the insurance landscape
  • Known credentials of adhering to industry regulations and compliance standards
  • Technological capabilities and commitment to continuous improvement and innovation
  • Proven capability to scalable solutions to accommodate the growth of your insurance business
  • A legacy of service quality, performance metrics, and responsiveness
  • Good pricing models that ensure transparency in cost structures
  • Effective change management strategies and a well-defined transition plan
  • Robust communication channels and collaboration tools
  • Reputation in the market, references and client testimonials
  • Shared values, communication styles, and a collaborative mindset contribute
  • Adequate contingency plans for potential disruptions
  • Credible commitment to sustainability and CSR practices

The bottom line, therefore, is – outsource, but with care!

In conclusion, outsourcing does offer numerous benefits to an insurance company. However, it is imperative to proceed with careful consideration and due diligence. Choosing the right insurance business process outsourcing services provider will require thorough assessment across a range of factors as indicated above. When approached with care, outsourcing has the potential to unlock efficiencies not possible with mere in-house specialists. It will also make specialized skills, both tech and non-tech, easily available thereby driving innovation. Overall, as shown in the graph at the beginning of this article, outsourcing has a proven track record of contributing to the long-term success of insurance businesses across the globe.

Cogneesol has been serving global insurance clients since 2008. Our carefully built insurance solutions have a legacy of providing customized and transformative solutions for our clients. We have delivered proven positive business outcomes. And thus enjoy the reputation of being a trusted partner for insurance companies worldwide.

Our understanding of the complexities of the insurance landscape, our focus on quality, compliance, and customer satisfaction underscores our dedication to delivering value to our clients. At Cogneesol, we continue to evolve our offerings to stay at the forefront of the insurance outsourcing sector, ensuring that our clients benefit from the latest advancements in technology and industry best practices.

For more information and an overview of our insurance solutions, reach out to us at +1 646-688-2821 or send an email to [email protected].