Insurers are well aware that they are exposed to evolving risks and need to adapt to changing customer expectations, needs, and trends with alacrity. The real 'risk' in this sector does not come from poorly conceived policies, or ill-researched actuarial science; it is the risk of not adapting fast enough to the pace of change that the industry demands. Complacency has been the bane of the insurance sector, and in the current economic climate there is no space for inertia.
Why Should You Outsource?
A Novarica report published in early 2014 states that more than 25% of U.S. insurers are increasing their IT outsourcing budgets this year. Nor is IT the only area of potential—the same insurance outsourcing formula can be applied to almost any process. Where a company spends $300 on servicing a policy, outsourced servicing could cost as little as $100.
BPM partners with deep domain expertise can help insurers establish new markets, exploit new sales channels, and support customer retention. Actuarial processes can be outsourced so that policy prices are optimized and new risk groups can be researched. Outsourcing to can also get your organization more 'organized' by consolidating systems and technology platforms across the enterprise. Transparency goes up as business process outsourcing providers help you pin down costs of activities such as paying bills, collecting receivables and meeting a guest; which means organizations can pin down the actual cost to sell a product or service, and improve consumption and service levels.
The buzzword in insurance analytics right now is 'rational indulgence'. Cost cutting is a high priority, but so is the need to secure a firm footing and expand in existing markets. Insurance companies have traditionally been slow to embrace outsourcing, but it may well become their tool of choice in volatile times.