The Role of BPO in the Insurance Industry

Posted by ICCS BPO on Saturday 5th of September 2020

In today’s volatile and highly complex business environment, substantial change is being witnessed in the insurance sector. The main reason behind this is the changing market drivers and stringent regulatory norms. The cut throat competition in the insurance sector has given rise to various operational challenges such as improving turnover ratios and their activity along with establishing a pricing model that remains competitive. In the past decade or so, enterprises engaged in the insurance sector have been appreciating the importance of flexible and agile outsourcing models. By leveraging the potential of business process outsourcing (BPO), insurance companies have drastically minimized operating expenditures along with streamlining back-office operations. Furthermore, outsourcing also facilitates the insurance company to carry out its daily functions by forming a robust foundation of profitability and growth.

BPO represents an efficient and strategic option for insurance companies that are trying to flourish in these tumultuous times. If implemented properly, it helps them in reducing costs, survive any economic uncertainty and most importantly set a concrete stage for future expansion and growth. Insurance companies frequently use outsourcing for different aspects of their operations ranging from business processes which include claims handling and underwriting to various other systems that reinforce those functions. Policy servicing is another area where immediate business benefits can be achieved. Advantages of a robust BPO model include rationalized delivery model, standardized business processes and a commercialized approach to customer retention and operations.

Having an Open Mind to Approach Outsourcing :

A large number of business enterprises have derived the benefits of outsourcing which has helped them to completely transform their business model to be successful operationally, financially and offer exemplary services to their customers. Initially only the banking and financial industry were the frontrunners in leveraging outsourcing but now even insurance companies are slowly cashing in on the huge influx of outsourcing opportunities. The insurance industry has seen a renaissance of sorts with various companies adopting strategic initiatives that enable information technology across different processes and functions.

For companies that find it hard to find or hire experienced staff, outsourcing can be a valuable and viable option that can stimulate productivity and facilitate growth. But for insurance companies that already possess employees with valuable skill sets and experience, outsourcing can maximize the impact of their employees by exporting routine tasks that allow them to focus on expertise and high-value components of their tasks.

Here are various aspects of BPO that are helping insurance companies boost their performance and productivity:

Call Center Services: 

A dependable call center outsourcing service provider that offers best-in-class inbound and outbound solutions can help insurance companies meet regulatory requirements, enter new markets by proving superior services and maintain customer loyalty. Insurance companies can leverage contact centers to manage customer queries and concerns through multiple channels including email, voice and chat on a round the clock basis 365 days in a year. Customer queries and concerns could vary from questions regarding pending claims, endorsements to a request for their policy statement. A survey conducted by Accenture found that 91% of insures believed that providing exemplary customer experience is the stepping stone to future growth.

Insurance companies can use call centers to follow up until the claim is over by reaching out to the customer when the claim is filed. A single customer service representative (CSR) can be tasked to follow it up regularly and see through the whole process until the end. During the sales process, CSRs can explain various coverages to the customer so that they become familiar with what aspects the insurance policy covers. Call centers can also provide emotional support as insurance claims at times can be quite upsetting and emotional for the customers. Call centers can also be instrumental in boosting trust of the customer with the insurance company when a claim is being filed by providing professional as well as emotional support.

Data Processing Services: 

Data processing is perhaps the most critical function that insurance companies must carry out throughout their operations. Ever since data processing engines were the norm, insurance companies have been the chief employers of computing. But as insurance companies grew, so did the data processing requirements of those companies resulting in them purchasing more computers and other technology related equipment thereby increasing the technology and administrative costs.

This is where professional back office BPO service providers came to the rescue of the insurance industry. The various data processing services that insurance companies could benefit from include accurate data entry tasks from paperwork that is received from the customers, data entry from business transactions such as sales of insurance policies, receipts and bills.

Role of Data Mining Services: 

Data mining has changed the way how various businesses function. For insurance companies, it has helped in discovering various useful patterns from customer database. The primary goal of data mining is to find useful patterns from previously unknown data. The technique produces great results and it enhances the decision making capabilities of the insurance company. The traditional methods of handling huge volumes of insurance transnational data are too complex and time consuming. Data mining service providers helps insurance companies to effectively manage customer data.

Outsourcing data mining allows insurance companies to identify risk factors that can predict profits, losses, and claims apart from providing customer-level analysis, sales, and marketing analysis, reinsurance, insights on developing new product lines, financial analysis, estimating outstanding claims provision and predicting fraudulent claims. Insurance companies can outsource data mining to support administrative and management tasks, control policies and efficiently manage organizational and financial data.

Role of IT Services in Insurance: 

The use of technology in the insurance sector has improved every aspect of the company’s processes and data management system. Outsourcing various IT aspects of an insurance company can be beneficial in various ways. Using state of the art technology can help insurance agents to quickly respond to customer’s needs and provide accurate information to customers concerning insurance issues. Professional IT outsourcing service providers can help insurance companies to drastically reduce the volume of paperwork dealing with proposals and policies by making available to the customers various web based applications that automate most of the processes and tasks. This enables the insurance company to meet the needs of their customers in much lesser time than traditionally expected. It even eliminates the need for paper handling and travel costs.

Service processes, that were once time consuming and exhausting, are automated through the implementation of the latest technologies which greatly increase the revenue of insurance companies. Outsourcing allows insurance companies to now generate more insurance proposals, policies and applications for their new customers thereby creating multiple opportunities for swift purchasing. Customers too are benefited as web-based applications allows customers to receive quotes, the complete application process, sign proposals and policies without even having to visit the insurance company in person.

Underwriting Services: 

The process of underwriting allows insurance companies to determine how much premium should be charged for a particular policy. Insurance underwriters, as they are called, thoroughly evaluate insurance proposals to determine its feasibility and the amount of risk involved. It enables insurance companies to gain a competitive edge over their competitors by bringing about process excellence, including catastrophe modeling, renewals and underwriting support. Underwriters also balance all the losses that insurance companies may incur from the probable risk of potential claims. Various aspects are considered by underwriting such as claims experience and credit ratings where lower claims experience or credit rating corresponds to low premiums.

The full spectrum of underwriting services is covered in the insurance sector by underwriting outsourcing service providers which range from advanced analytics to business process management. Other underwriting services include submission and clearance where documentation on liability coverage, application processing eligibility checks, account verification and data scrubbing is done. In property data management, outsourcing providers use rating tools and automated underwriting engines so that the underwriting team can effectively price risk. Services of auditing exposures and risk during the policy’s tenure are also carried out.

Finance and Accounting Services: 

Insurance companies assume and manage risks of their customers in return for a premium. Aggregated historical data from various similar policies is used to calculate the premium for each policy and the premium is paid well in advance of the service delivery. With increasing customer base, the volume of financial transactions also increases. For insurance industry which has a fiduciary responsibility to the public, special accounting rules have evolved. Solvency was monitored by the state to protect insurance company policy holders and therefore statutory accounting principles were developed.

Insurance companies can closely work with expert finance and accounting service providers to design, transform and run finance, billing and accounting associated functions to improve cash flow and increase customer satisfaction by bringing about improvements in the end-to-end processes that integrates and streamlines enterprise wide billing and collections, reconciliation and application.

Apart from financial gains, insurance companies can also get other benefits from outsourcing such as improved ease of increasing the operational capacity by documenting workflow and placing the burden of other non-core activities on the outsourcing service provider thereby improving the efficiency of the in-house staff. Insurance companies are leveraging the potential of business process outsourcing (BPO) to streamline their backend operations effectively, maximize revenues and sales while drastically trimming down their overall capital expenditures. The insurance business is continuously evolving and for insurance companies to remain relevant and competitive, they must keep adapting and strive hard for excellence.

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