Leveraging outsourcing to overcome challenges faced by Insurance companies

Q : Challenges faced by insurance industry?

Ans : The major challenges faced by insurance companies today and particularly for insurance companies that have been around for sometime are large cost base inherited from legacies either through acquisitions or through mergers. So there are large number of insurers that are carrying multiple systems, carrying multiple employees on different terms and conditions, employees with large inherent costs, pensions, redundancy exposures etc.
So these companies are trying to compete in a modern environment with new entrants; new entrants coming in from different geographies and those geographies can include lower cost regimes like Gibraltar. They are coming in with much leaner operating models, and particularly new technologies enabling those people to compete. So new technology around access to customers through aggregate websites, money supermarket websites etc.
These new entrants are coming in with a very low cost base, very lean model, very quick to market and some of the more traditional insurers are struggling to control that.

Q : How can insurers respond to market pressures?

Ans : Insurers need to respond to market pressures in two ways. The first way is to focus on getting to their customer and to developing a product set to keep up with changes and innovation in the market place. That’s where the specialism in insurance companies themselves often lies.
The second thing they need to do is to look at the problems that they may have in an inherited organization; problems around processes, problems around people, problems around technology. Now they can employ people to go and look at how they can revise and improve those processes. But more often than not, it is better for them to employ specialist experts from the outside to look at reviewing and revising those processes. So this could be analysts, it could be consultants, it could be third party service providers, outsourcing specialists or people who have to do that offshore.

Q : How can outsourcing help insurers?

Ans : Insurance companies often have to react quickly to changes in the market place. This can either be due to storm events, for example in claims office or it could be due to new products being launched over the internet.
In the first case in the storm event in a claims situation, insurance companies will need to put more people on to phones to resolve customer queries as more claims come through. If you are sitting with a fixed headcount then that can be a problem getting new people, it can be a problem of flexing up your working hours.
If you have got a service provider who is doing that service for you, they are more likely to have a greater range of staff, people with different hours, different time that they can come in or they might be able to move customer service from contracts that aren’t perhaps seasonally dependent or storm related. So using a TPA can help in that circumstance.
When it comes to launching new products in the market place there is a large cost involved particularly on the technology side of new products. That can be inhibited to insurance companies doing something. So in that circumstance it might be cheaper to look at perhaps rekeying information from one system to another and getting that work done offshore or training up an offshore team to do the piece of work, so that it doesn’t affect your onshore infrastructure.
That can enable you to have a pilot or a growth phase without incurring significant cost and enabling to test whether that product works in the market place.

Q : Why WNS?

Ans : We are a global player, so that gives us a greater knowledge of our markets and a greater knowledge of our customers. In addition, we came to this market with a different approach; we wanted to provide our own people with a career rather than give them just the job.
So we have people who joined us and might start with simple processes, but those are people with the ability to get better and to do more complicated tasks. In the insurance sector we got people who do a wide range of activities from taking initial calls, customer service calls, claims right through a more complicated action such as dealing with underwriter queries, dealing with more complicated claims such as employee’s liability or third party injury, right all the way through to high end functions such as actuarial staff and corporate finance functions.
So, because we give that range of career to our staff, we are able to then train our staff to give a better service back to our customers. Our staff are more motivated, more concerned about giving good delivery and more concerned about giving good customer service.