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How Do Insurance Market Fluctuations Pave the Way for Outsourcing?
Earlier, insurance companies were depended more on brokers, in-house teams for sales and after-sales operations. As a result, they invested massive amounts of money in BPOs for customer interaction. However, later, with the advent of online self-service platforms, fewer customers are using those centers.
Health and auto insurers have experienced a dynamic shift from BPOs over the years. Besides, self-service initiatives, changes in customer demand, advancements in technology, and growing competition are the reasons behind market fluctuations.
Today, insurers are seeking new business practices to increase operational flexibility and efficiency while lowering investments. So, for sales and post-sales insurance operations, the demand for insurance back-office services has increased rapidly. Today, outsourcing is known as one of those modern business practices that are practically beneficial.
“According to Ernst & Young’s Global Insurance Trends Analysis 2018, the insurance industry not only showed steady growth in 2018, but also is estimated to increase by another three to four percent by the end of 2019.” (Source)
“The global insurance business process outsourcing (BPO) market projected a CAGR of approximately +20% in the midst of the estimate time span of 2019-2025.”(Source)
Let’s discuss the Insurance market fluctuations in detail
What is Business Process Outsourcing and How Can it help?
BPO refers to delegating a company’s processes to a third-party service provider in the same niche. This trend is becoming unstoppable. Outsourcing has become a beneficial strategy for insurance companies to manage complex processes to boost business performance.
You can opt for administration services, policy management, claims management, data processing and commission management services.
With useful technologies and business strategies, insurance BPO is helping the industry to be prepared for the possible obstacles. The following are some of the core benefits of outsourcing for insurers such as reduction in workloads and operating costs, improved flexibility and scalability, and expansion of core business functions.
What Does Insurance BPO Look Like Today?
With continuous technology, companies have realized outsourcing can help them improve service delivery aspects and gain an edge. Today’s insurers are focusing on implementing practices that reduce risks and secure the health, properties, and future of clients.
This shows their competence at its best. Also, they outsource processes to third-party service providers having a highly skilled and experienced workforce. These processes include data mining & management, IT support, finance & accounting, etc.
The significant difference between pre-technology and insurance process outsourcing, the industry is more focused on utilizing capabilities of technological advancements.
Joining Hands With Outsourcing Companies
Outsourcing customer support has slow down, increasing the need for self-service options. The real benefit of outsourcing is that the insurer takes advantage of the insurance experts, insurance applications, round the clock services, and some more that are usually offered by the outsourcing partners.
According to one global outsourcing survey by Deloitte, “59% of businesses surveyed said outsourcing is used as a cost-cutting tool.” (Source)
Another advantage is that the insurer can cut-down the outsourced projects and even close-down if needed. This way, the insurer ensures preventing loss in case the business faces a work shortage. Or, if the insurer realizes that there’s no need to outsource anymore, the service provider would accept the decision and deploy their resources to other clients.
“78% of businesses all over the world feel positive about their relationship with their outsourcing company.” (Source)
Outsourcing as an Effective Tool for Insurance Business
Insurance business process outsourcing brings opportunities for insurers to turn the third-party services into a highly beneficial tool to successfully achieve a competitive advantage over others in the market. Let’s discuss such opportunities.
1) Platform Consolidation
Insurers can outsource platform consolidation to resolve multiple issues arise due to outdated technology and cut costs on over usage of systems. By consolidation, they can also lower the number of systems used for various processes. Moreover, they don’t need to invest substantial amounts of money in IT infrastructure and staffing.
2) Secure Data Migration
A few years back, it was a big deal for insurers to migrate data related to customers and policies from an old platform to a new one, for example, one computer application to another. At the same time, the process of migration, testing, and quality assurance was challenging and expensive. But by utilizing third-party data migration services, companies can now migrate data efficiently & securely while preventing risks included.
While many companies assume that most BPO companies are based in Asia or Eastern Europe, many outsourcing providers have multiple centers across the world, offering various levels and types of services. By making complete utilization of the outsourcing service provider’s global delivery network, insurers can attain the best possible capabilities at flexible & competitive prices.
4) Fulfilling Customers’ Desired Expectations
Consumer demands were never that much diverse that much they are in this digital age revolving around smartphones and social media. Insurance consumers, nowadays, expect the providers to deliver service-related experiences similar to what they receive from their online retailers, credit card companies, banks, etc.
There is an utter need to withstand issues associated with changing customer demands that lead to market fluctuations. Here, BPO helps to pave the way to make customers completely satisfied.
5) Quick Delivery of New Products
It generally takes years to introduce new services and products to market in a quick and economical manner, which hampers the company’s capabilities of achieving a competitive advantage.
BPO, for insurers, works as a booster that reduces the turnaround time it requires to build, develop, and deliver services and products on the market by using shared resources, software, and hardware systems. The insurance BPO service provider can assist the insurer as a strategic partner to identify and make full use of the resources essential to convert the idea into a product or service and introduce it on the market.
6) Becoming Compliant
Outsourcing regulatory requirements to a team of experts (having an in-depth understanding of regional as well as international regulatory requirements) ensures that you remain in compliance. With the removal of such a responsible task from the list of day-to-day responsibilities, insurers can focus on opportunities offered by regulatory legislation and primary business activities, leading to a successful insurance company.
Insurance Process Outsourcing: What Would it Look Like in the Future?
Insurance BPO will remain in the industry as highly considerable support to the insurers. Actually, as per one report by Gartner, Inc., “spending on business process outsourcing (BPO) is forecast to achieve the highest growth in 2019, at 14.4% year-on-year.”(Source)
As we can expect to see more technological innovations and advancements in the future, more and more insurance companies are likely to outsource most of the complex tasks they manage today. Especially to withstand operational issues and meet customer expectations.
Cogneesol holds more than 11 years of experience in helping insurance companies to transform their operations, increase efficiency, and enhance operational ability in order to achieve true competitive differentiation. We work with the world’s leading insurers to help them improve their processes and institutionalize the knowledge within the Cogneesol organization.
We provide complete support to insurance companies, agencies, and independent insurers in handling almost all insurance business processes and activities, including policy management, insurance reporting, commissions management, claims management, insurance agency management, insurance accounting, etc.
To know more about our services, please feel free to get in touch with us at +1-646-688-2821 or write an email at [email protected].
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