Ernst & Young’s Global Insurance Outlook expects that some insurers will outsource insurance and insurance support services to third party providers in the Philippines, India and China to address unique challenges and achieve business objectives. Insurance support tasks are especially suited to outsourcing because they tend to be routine, non-core activities that can be better performed by someone else. Insurance support offshore outsourcing help companies achieve numerous benefits throughout the course of their partnerships with third parties.
Insurance support providers are more likely to have cost-effective workflows and systems for doing routine tasks because this is their core business. The cost of support services, infrastructure, and technology is spread across multiple clients instead of being passed on to individual customers, leading to better cost savings. By working with a service provider, many insurance support offshore outsourcing providers are able to improve efficiency through economies of scale and outsourcing support tasks to a low-cost location.
However, there’s always a risk that policyholders, internal staff and customers will be negatively affected by the implementation of cost reduction measures, whether through outsourcing or other means. Insurers understand that transferring responsibility for certain functions to a third party can inconvenience personnel and clients. Due diligence and careful planning are needed to ensure that the outsourcing project is a positive experience for all parties.
Because each insurance firm’s situation is unique, a customized insurance support solution that meets cost reduction targets is ideal. For some firms, offshoring tasks like customer support and document/claims processing is the perfect solution. Others may prefer to work with a local or near-shore vendor that provides better continuity in terms of staffing, communication, and oversight.
Competition is getting stronger in the insurance industry as customer loyalty declines and new entrants introduce new products. In this highly competitive and price-driven environment, top-performing insurers are the first to get their products to market. They install new products onto their systems in as little as three weeks. They use data and analytics to turn buying patterns into competitive advantage and achieve better price positioning. This level of performance requires state-of-the-art systems that allow simultaneous development and testing of multiple functions. With better capabilities, insurance support offshore outsourcing providers are able to help insurers build agile, integrated and feature-rich systems that improve time to market and drive differentiation.
In the U.S., the National Association of Insurance Commissioners (NAIC) has launched initiatives to reduce the regulatory review timeframe and unify regulatory review process and regulations across all states. Filing requirements and methods of communication with regulatory agencies are more dynamic than ever, causing insurers to invest in tools that ensure their forms are compliant upon submission. The filing process is changing from paper-based to electronic systems, and many firms are struggling with the transition. Third parties help insurers develop and maintain both old and new systems during this critical time.
In a fiercely competitive market, insurers are using outsourcing to improve the bottom line. Many firms struggle with dropping collections and debt recoveries while facing pressure to improve the level of customer service. Third parties have proven tools and trained insurance specialists/customer service agents to manage collections and dispute management operations while boosting customer satisfaction. Skilled agents can improve collections and reduce the claims life cycle, while process transformation can eliminate system inefficiencies. A vendor specializing in a particular insurance vertical can identify overlooked opportunities or risk areas and address revenue leakages to improve profitability.
By introducing new initiatives and re-engineering delivery teams for a European insurance firm, for example, an insurance support offshore outsourcing provider was able to increase daily collections by 30 percent within the first year, reduce claims settlement time by 40 percent (leading to higher customer satisfaction), and generate additional business of 5 percent. Claims tagged for litigation were sent to the legal department within two days, further reducing the claims lifecycle.
Expanding companies that acquire blocks of business also acquire administrative platforms that can be difficult to integrate with existing systems. Many of these are outdated mainframe-based platforms that are slow, inefficient and often cost more to maintain than upgrade. Whenever a new block or product is added to a legacy system, it creates another interface and another layer of expense. It is notoriously difficult to implement enterprise-wide changes and create ready-to-sell products within this dense technological sprawl. In addition, legacy platforms are risk-prone and incompatible with modern technical skills. Customers demand real-time solutions; and agents must be able to pull files in seconds, not minutes.
System integration is time-consuming and labor-intensive whether done in-house or outsourced. However, performing integration in-house can be very expensive and has the added disadvantage of potentially distracting internal staff from core activities. A third party insurance support outsourcing provider can help growing companies and insurers in the midst of mergers and acquisitions transition painlessly to centralized platforms. Service providers have the experience and technology to reduce processing costs for newly acquired blocks built on legacy systems. Without sacrificing service quality, they can further drive down costs when the client outsources more blocks of business. In fact, clients can expect an improvement in service levels because changes are engineered into upgraded systems and agents are using better tools.
A typical insurance firm devotes less than one percent of its workforce to the filing of forms and rates. However, policy filing is a highly-specialized function that requires skilled and timely handling. Filing volume can be unpredictable, with many periods of little or no work as well as peak periods when new filings and approvals/objections pile up. This characteristic makes the filing process ideal for outsourcing.
Insurance support specialists are more likely to have the resources (manpower and technology) to devote to each step of the function and proper delegation of responsibilities. Instead of one person doing both initial filings and notification of approvals, for example, these separate tasks are delegated to different individuals. When a worker falls ill, goes on vacation or leaves, the external firm can quickly provide a replacement. With a larger workforce and better resources, the service provider can review work before it is filed to eliminate redundancies and errors that delay the process. Insurers can also scale their workforce easily depending on need, without the financial and emotional issues associated with hiring and firing internal employees.
Insurance support providers improve customer satisfaction and engagement by expanding distribution and customer service capabilities. The modern insurance customer connects and engages with providers through multiple channels. Companies that interact with their clients through a single connection point risk being left behind. Offering other modes of communication improves competition for profitable customers and prospects while improving client access.
Today’s insurance customers are also more savvy and demanding. They seek real-time support, instant delivery and price transparency. They use price aggregators to move quickly from information gathering to purchase. Insurers are working with third parties to add more channels/distribution outlets and develop capabilities that meet full customer service needs. Top-performing insurance support providers are going further by the optimizing the channel mix and integrating data analytics tools with CRM software. Sophisticated data analytics provide deep insights into customer preferences, help insurers tailor products to customers, and enable brokers to identify and convert high-value prospects.
Learn more about outsourcing in the Philippines, outsourced staff leasing and the Philippines as an outsourcing destination.
Talk to an expert today. Contact Sourcefit to learn more about the possibilities and opportunities of building your dedicated team of professionals in the Philippines.