Jessica: Hello and welcome to the WNS business insights podcast series. My name is Jessica Reinelt and I am your host for this podcast and joining me today is Rajesh Desingu, VP of the insurance practice at WNS, North America. WNS is a leading global business process outsourcing company.
Today we’ll be talking with Rajesh on the topic of how insurance companies can leverage Business Process Outsourcing to improve research and analytics across the core insurance function.
Hello Rajesh and thank you for joining us today.
Rajesh: Hi Jessica. Looking forward to this conversation.
Jessica: So Rajesh, just to kick this off, why don’t we start by talking about some of the trends and challenges insurance companies have to address today? And how can richer analytics help address these issues?
Rajesh: Jessica, you know like most of the industries, insurance companies are also facing one of their most challenging times in this recent history and it is having an impact across all insurance functions. Now let’s take sales. It has really taken a hit. Annualized life insurance premium sales are down on an average 22 per cent in the first two quarters. Now that’s the steepest slump in 67 years according to the recent LIMRA study and the policy counts are continuing to drop. It dropped almost 4 per cent in the second quarter. Now this kind of crisis affects every function of the insurance company and it has implications across all operations.
Jessica, in my conversations with senior executives, there are a number of areas where they would like to have better information, more information and use much more robust research and analytics to take decisions. Now let’s look at some of these. 1) How can they optimize premium pricing. That ultimately decides the profitability. So that helps them analyze profitability of each product to ensure that they are very competitive against their peers. 2) Analyze the efficiency of the distribution channel as well as the marketing campaigns to get the maximum value of dollars spent. Let’s look at the third (point). They really want to minimize fraud, you know fraud analytics, they spend lots of money in trying to minimize fraud across both the new business applications as well as claims processing. They could really use research and analytics in that area to build better predictive models and finally, insurance companies have huge amounts of legacy data. They can convert that into a business intelligence that would help them to better segment customers and design products specific to each of the target customer groups.
Jessica: Okay so how can outsourcing help improve research and analytics?
Rajesh: Jessica, outsourcing can really help senior executives to obtain robust management information across all insurance functions. For example, an outsourcing service provider can help reduce the cost of analyzing unstructured legacy data by taking advantage of the global delivery centres and lower operational costs, you can create ad hoc reports, on demand reports without having to invest in huge data warehouse solutions and sometimes depending on how big the insurance company is on the kind of data this can run into a few million dollars. They can really help provide better customer insights, competitive pricing analysis, efficiency of marketing dollars spent to design the right products for the right market segment.
The bottom line is if research and analytics outsourcing is implemented properly, it can be a fast and a simple solution to compete with enhanced knowledge that helps you understand every aspect of customer behaviour, getting the most out of the marketing spend, drive sales force productivity, and help enter new products with a targeted strategy. Now this helps organization survive the current economic challenge and set the stage for future growth and expansion if the economy recovers.
Jessica: Can you share some examples of how WNS has helped insurance companies benefit from outsourcing research and analytics?
Rajesh: Absolutely Jessica. I can give you a few examples. Now for a Fortune 500 insurance company, WNS helped identify the drivers for customer retention, mid-term cancellations, conversions and acquisitions. Now all of this helps them to you know go back to the customer especially when they are cancelling and help them retain or if they are cancelling the policy end of term you can really help to convert into an annuity product.
Now let’s take another example. For a leading insurance company, we helped build demand models – the models that enable the client to get a clear picture of the customer’s price elasticity. You know the elasticity at different price points becomes extremely critical in the current economy when people are losing jobs and they probably do not want to pay premium. So by doing this analysis, you are able to arrive at the right pricing.
Let’s take another example, Jessica. Now for a global insurance company, we work with the agents proactively, beginning three to six months before the life policy matures. By doing that we help to convert these life policies into an annuity contract which means now we have customers buying new products from you and this increases the sales. Now let’s take one another example. We helped an insurance company market a white label product to a specific target group which it was not previously addressing. Now you have a new target segment that you are selling to which will increase sales. Now Jessica, as you can see from all of these examples, the benefits of research and analytics outsourcing include – it definitely increases sales, it significantly reduces the cost of operations and increases the customer satisfaction. Of course, all their process efficiency is achieved by Global Delivery Centres and reduced operational costs.
Jessica: Okay those are great examples. I only have one more question for you, what are the things that senior executives should bear in mind when they are looking to outsource research and analytics?
Rajesh: That’s a great question Jessica. There are a few things that the senior executives should really do. Ensure that there is support for the program from the senior most levels in the organization. They really need to move fast as there is no change without urgency. One way to do this is debiting budgets in advance. Building BPO savings into the budget ensures that managers stay committed to the outsourcing program.
They need to ensure that the task force leading outsourcing initiatives is empowered and it has the right talent. Last but very important is the aspect of alignment of goals and culture between the insurance company and the service provider. The single biggest reason for failure of an outsourcing agreement is lack of this alignment. So just make sure that you choose a service provider who aligns to your goals and culture.
Jessica: Great. Well, Rajesh, thank you for taking the time to speak with us today about improving research and analytics across the insurance function.
Rajesh: Thanks Jessica. It was a pleasure speaking.
Jessica: Thank you. For more information on how you can leverage analytics to deliver actionable insights for your business function please visit www.wns.com