The global insurance sector will spend about $3.5 billion in business process outsourcing (BPO) in 2015 for digital consumers and data analysis. According to a report by Everest Group, the insurance sector will also invest more than $700 million for renewals annually following years of increased spending.
The property and casualty (P&C) insurance segment will double the growth rate of the life and pension (L&P) sector, which accounts for 60 percent of overall spending. The growing number of digital consumers, improved data analytics and the fact that BPO depends on information technology are the main drivers of the increased investment.
Everest Group said that insurance companies need to meet expectations as customers become more comfortable with digital marketing. Insurers are looking to BPO providers to help them navigate digital channels and understand the modern consumer.
The possibility of customers switching to other insurance providers is another factor driving the higher BPO spending. A study by Accenture showed that about 25 percent of 6,000 people in 11 countries would consider companies like Amazon and Google as alternative insurers, 67 percent would consider buying insurance from other than traditional companies, and 43 percent would consider banks. The remaining 23 percent mentioned online providers as alternatives.
BearingPoint business consultancy published a similar study showing that 90 percent of insurers currently have no company-wide data strategy, and are in danger of being sidestepped by more tech savvy data aggregators. Insurance firm Ecclesiastical recently partnered with India's ITC Infotech to integrate company data and reduce the time and expenses related to pricing the company's insurance products.