Revealed: The Mystery behind Insurance Industry

Why is insurance such a complex industry? Why embracing new technology is challenging for them? Well, to be honest, insurance sector never have those golden days. The cut-throat competition and changing government regulations is the main cause behind it. It is hard for insurance companies to increase their turnover ratios and maintain pricing models that remain competitive in this agile market.

On the contrary, Business Process Outsourcing (BPO) in the insurance sector has gained popularity in a short period of time. In 2017, BPO industry has grown at a whopping ratio of $178 billion and is still continuing to grow. Nearly, every sector is growing today by integrating with BPO companies and insurance sector is no exception in this case.

Earlier, insurance sector was beset with various challenges, but now joining hands with BPO companies’ insurance businesses have positioned themselves at the top of the market.

You might be thinking how this has become possible?

BPO companies are proficient in transforming and managing business process and operations, which include those that are intricate in the insurance sector. The reason behind the growth of BPO in the insurance sector includes:

• They have vast industry expertise
• Deliver project within the agreed time-frame
• Give flexible pricing models
• Use state-of-the-art framework
• Prioritize data security
• Available 24/7
• Help to reduce time-to-market

Let’s take a look at the case. In November 2006, the winter storms in Buffalo NYC flooded the insurance companies with numerous claims. Approximate 63,000 applicants filed claims, which severely impacted the operational activities of the insurance firms. That year, Property Claim Services; estimated total loss of $210 million and more than half of that, i.e. $150 million was caused due to personal losses.

In such scenarios, if you partner with a BPO company it becomes easier to manage the back-office processes. Partially, BPO companies can handle your documentation, data entry, verification process, commissions, loss runs etc., that can help you focus more on processing claims and dealing with the bank to pay the claims rather than verifying documentations in bulk.

According to the statistics, the performance of outsourcing market trends 2009-2012 and forecast 2013-2016 explains that there is an unprecedented increase in demand for BPO companies among insurance businesses, which has increased the ratio up to $217bn.

In the beginning, I raised a question “Why insurance is such a complex industry?"

Well, here are three main reasons:
• The Emergence of New Technology
• Changing Government Regulations
• Changing Customer Expectations

How are BPO companies helping insurance businesses to get rid of these complexities?

 BPO companies are well versed with the new technology and they keep themselves updated with now and then changes in the market. Various automation tools and platforms are being introduced to streamline the processes in the insurance business such as Vertaforce, Nexsure, aspire, InsurancePro, etc. Even though if you think of managing these software's in-house it will cost you in tons, so insurance businesses usually prefer insurance outsourcing services.

 Insurance businesses are mostly impacted due to various regulations imposed by the government, which restrict the underwriting practices. BPO companies stay updated and enriched with different regulations according to the specific countries. For instance, if there is an amendment in law, the insurance businesses that have outsourcing partners do not have to face difficulties; they can easily manage their underwriting process and price the premiums accordingly. As the BPO companies offer advanced analytics to business process management that includes submission and clearance of documentation on liability coverage, application processing eligibility checks, account verification, the amendments in policies, etc.

 Customers these days have become sophisticated and they are looking for personalized services. With the advancement in technology, various online platforms offer insurance coverage to the customers. They don’t have to move around for insurance policies, they can sit at home and choose their policy or premium plans. But adopting these technologies is challenging for insurance companies. So BPO service providers help insurance businesses with “personalized customer service” that too.

 Most of the BPO companies are located in the developing countries of the world such as India, Philippines, China, South Africa, etc. as they offer expert services at reasonable rates. Well, in the recent years, India has become one of the largest outsourcing hubs across the globe. It is still continuing to grow with the support of local and international service providers.

The Conclusion

Thus, the mystery behind the rapid growth of insurance businesses is “Outsourcing”. This magic wand has restructured every process in the insurance businesses. Apart from cost saving, insurance companies have experienced an increased operational efficiency, appropriate flow in the documentation process, reduced burden of non-core activities, and so on.