The rapid digitization and product innovation have proffered a significant opportunity for insurance carriers to offer new value to their customers and open up new revenue sources. However, as more contemporary technology, products, and services enter the market, insurers using old-time products raise some questions. How do we manage existing legacy services and products cost-effectively and impart improved CX while turning our focus to the future? How can we adopt new technologies to streamline repetitive back-office operations & enhance turnaround times?

For many carriers, Business Process Outsourcing (BPO) services provide an answer to these questions. Shifting the responsibility of insurance processes to a third party can not only be more cost-effective than managing them in-house, but it can also enable insurance companies to concentrate on new ideas and markets. Furthermore, with the advent of contemporary technologies, the BPO industry has up-skilled itself and has undergone a significant transformation. It has created new opportunities for insurers to build customer loyalty and gain new insights from vast data stores, thereby improving accuracy and efficiency. Additionally, today’s advanced BPO companies can leverage RPA to automate back-office operations and help insurers tackle the interminable issue of replacing older legacy systems with modern, agile applications.

All these developments imply that insurance business process outsourcing services are going to play a vital role in intensifying the growth of the insurance sector in the near future.

Top 4 Reasons Why Insurance BPOs will be in Demand in the Forthcoming Days

Structural Challenges

The insurance sector is witnessing structural challenges like increased price transparency to users, the growing impact of digitization, etc., that are likely to impact their cost structures. The industry is observing a massive disparity in profitability between the leading insurance carriers and the rest of the market. According to a recent survey by McKinsey's, “the differences in operational costs between top and bottom quartile players were consistently more than 60% across every business function and, in some cases, bottom quartile players had unit costs more than twice those of top-tier players.” While other carriers have implemented standard cost-cutting measures, they still have a massive opportunity to boost their performance.

Henceforth, with numerous growth challenges, operational excellence is the key solution for insurers which can be successfully achieved through outsourcing, thereby boosting business performance and profitability.

Impact of Economies of Scale

Top-tier insurers have taken several steps to benefit from economies of scale in decreasing their operational costs. This advantage is not available to carriers operating at a comparatively smaller scale. By outsourcing insurance services to a reliable BPO, insurance providers with high costs can get the same scale advantages as top insurance companies.

Increased Digitization & Automation

With the initiation of digital transformation and the adoption of automated technologies, the IT costs of insurance companies have ascended enormously. As per McKinsey’s survey, there has been a substantial increase in insurers’ IT costs. The survey highlights that “IT costs as a share of total operating costs went up by 24% in property and casualty insurance.”

While leading insurers have the resources to invest in IT, others cannot rely on IT alone to enhance their operational performance. The same survey says, “Increased automation and digitally streamlined products and processes, in particular, will drive significant cost reductions, especially in operations, parts of IT, and support functions.” The survey reflects that greater BPO levels will play a significant role in cost reduction and that a combination of low-cost locations and economies of scale can provide up to 20% of cost savings in technology and operations for insurance organizations. Insurance BPOs offer a mix of both economies of scale and low-cost locations, which can aid insurance carriers in augmenting growth.

Continuous Productivity

The top-quartile insurance carriers have implemented several cost-cutting measures with a mindset of constant improvement in productivity. Besides their increasing IT expenses to enhance profitability, they have also invested heavily in outsourcing.

If other insurers have to catch up, they, too, have to increase their investment in outsourcing insurance BPO services. It is essential for them to set annual cost-cutting targets, which they can discuss with insurance BPO providers and make them a partner in achieving the target ROI.

To Sum Up

BPO providers can potentially create a substantial impact on the growth of the global insurance industry in the upcoming days. Presently, insurance companies are struggling for growth and facing huge competition in achieving operational excellence at reduced costs. Outsourcing insurance services can improve operational standards and enhance cost efficiency, thereby providing rapid turnaround times, stringent quality checks, and advanced security. As a result, this will yield improved customer satisfaction and help insurers soar high.

Get in touch with Primis BPO to seamlessly execute insurance processes at a faster turnaround time.