The current insurance business environment across the world has become fast, complex, and dynamic. The insurance sector has seen a massive shift in the last few years due to several influential factors such as frequently changing regulations, growing competition, talent acquisition problems, and many more. Consequently, insurers have been facing multiple challenges ranging from back-office management to increasing turnover to maintaining competitive prices of policies.
Considering these and many other factors that usually have a significant impact on the overall insurance business, insurers are in the utmost need of robust solutions to survive and thrive.
Why is Business Process Outsourcing an Excellent Solution for Insurers?
Over more than the past decade, insurance carriers and agencies, and even MGAs have obtained support from insurance BPO, realizing its importance to establish a flexible and optimization-focused operating model.
Utilizing the readily available resources and expertise provided by insurance bpo companies, insurance businesses have been able to extend their staff, manage operational risks and continuity, focus on core operations, and reduce expenditure. By outsourcing a few or some low-margin business processes, they can get more time to perform crucial daily functions and focus on achieving higher profitability and growth.
Now before we go deep into how outsourcing helps insurance businesses reach a whole new level, let’s check some relevant, interesting, and insightful stats.
If we look at the bigger picture – the global outsourcing market, here are some interesting facts to know;
- The US alone outsources approximately 300,000 jobs annually
- Cost reduction is the top reason for outsourcing
- 24% of small firms outsource to boost their business efficiency
According to a recent study by Mordor Intelligence, insurance bpo companies are expected to witness an average increase in CAGR of 5.4% between 2022 and 2027. –
The stat shared above reflects an anticipated increase in the global shift to outsourcing across the insurance sector. Insurance bpo services have the potential to help insurance organizations not only come back on track but also unlock growth opportunities while minimizing operational expenditure by up to 50%.
What Are the Top Challenges for Insurers in 2022 & Their Solution?
Remote Operations & Workforce Management
The sheer need (in early 2020) to go remote overnight has brought a new set of challenges. It is not easy to shift to a completely remote environment or adopt a hybrid model. For a global insurance company, the remote working model can have more challenges due to the work conditions and time zones being different.
The Outsourcing Solution
Most BPO firms have their presence across the globe and can very well sync with different time zones worldwide, ensuring complete operational continuity. Much more than that, they are working remotely for several years and can ensure complete confidentiality of client data.
Financial Management & Recovery
The traditional sources of revenue that insurers had relied upon are almost dried up due to the recent pandemic. For example, insurers have experienced low sales of worker’s compensation coverage due to job losses. Financial recovery is here to remain a big challenge in the years to come.
The Outsourcing Solution
Insurance bpo services have come up as an excellent strategy to access world-class talent at affordable costs. With outsourcing, insurers can get the required work done without paying a monthly payment (salary), instead, they can rest assured about the high quality of operations by paying on a project or hourly basis.
Dealing with Resource Constraints
Insurers have had a difficult time securing resources and there’s a need to overhaul their organizational strategies. Moreover, as nations worldwide are planning to put a partial lockdown, resource constraints will become a bigger problem to deal with.
The Outsourcing Solution
Insurance bpo firms have the capacity and resources to fulfill such needs. They usually have a pool of talent, which can be accessed quickly to manage crucial business areas such as claims management, renewals, underwriting, and others. This will help insurers not only increase their capacity and productivity but also save costs on infrastructure and IT systems.
How Does Insurance Outsourcing Take Insurance Businesses to a Whole New Level?
Workload & Resource Management
Recruitment and on-job training are costly processes that can drain more monetary resources than they can generate profits. These costs might not be affordable for a medium-size company or agency that is already on the verge of a capital crunch, especially in peak times. Here, a reliable provider of quality insurance outsourcing services can help reduce the workload and manage operations efficiently. Doing this will not only help save costs but also utilize in-house resources more effectively.
Customer Experience Enhancement
Many times, insurance businesses use their resources for multiple areas. For example, giving the responsibility to remind customers to someone who is working in the renewals division. The person who sits in the back office looking for pending or forthcoming renewals might not be the right person to deal with customers directly. Outsourcing some of the back-office operations can help free up some staff members that are good at communication and can be utilized for customer interaction or they can in fact enhance customer experiences across touchpoints.
When you outsource some repetitive, time-consuming, and tedious tasks to an external firm, you will realize your in-house team has more time to focus on other crucial areas. You can have them dedicated to overseeing the work done by the outsourced partner or give them other responsibilities. When you have the partner as an extension to your in-house team, you can speed up functioning and so do turnaround times.
Robust Data Security
Most insurance bpo firms adhere to data security guidelines set by national and international regulatory bodies. This is one of the biggest relieves for an insurer because they know they store and handle a substantial size of data on a daily basis and how important it is to secure the company as well as customer data. Note – always request a relevant certificate or document that certifies the outsourcing firm and ensures complete data security.
A 360-degree Solution
Outsourcing insurance business processes can cover the needs of an insurer in a 360-degree manner. It can help insurance businesses reduce workload, clear backlog (if there’s any), reduce operating costs, streamline operations, optimize processes, speed up functionality, enhance capacity, increase efficiency, and boost productivity. All these conclude to helping the insurance business boost profitability and run toward growth a little faster.
Outsourcing Could be a Viable Solution for You
For organizations in the insurance industry, outsourcing can be a very advantageous option. Although the benefit of cost savings usually entices businesses to try it, access to skilled talent and gaining efficiency and expertise are other factors that make them vouch for the concept of outsourcing. Given the uncertainties in the insurance industry and the slow rate of digital adoption/transformation, you, as an insurance business owner, could use outsourcing as the most crucial initiative you can take in 2022.