The Great Shift: Understanding the Why Behind Insurance Outsourcing
The insurance industry is undergoing a major shift. More and more insurance companies are choosing to outsource various business processes and operations to external business process outsourcing (BPO) providers. This trend, often referred to as “insurance outsourcing,” is rapidly changing the way the insurance sector operates. But what’s driving this shift? Why are so many insurance companies looking to outsource parts of their business?
In this article, we’ll explore the key reasons why insurance outsourcing has become such a major trend.
Reducing Costs and Improving Efficiency
One of the main appeals of outsourcing for insurance companies is the potential for significant cost savings. Maintaining extensive in-house operations requires a substantial investment in real estate, equipment, and labor. By outsourcing non-core back-office tasks to specialized third-party providers, insurers can reduce their overhead costs considerably. Outsourcing providers can supply highly qualified, English-speaking and experienced staff for the full range of support positions commonly required by insurance agencies.
Outsourcing can also streamline operations and improve efficiency. Many insurance processes and back-office functions are repetitive and routine in nature – data entry, documentation, claims processing, etc. These tasks can often be accomplished more efficiently at scale by dedicated outsourcing providers. This frees up the insurer’s staff to focus on higher-value work like devising new schemes, underwriting policies, and selling insurance products.
Insurance Outsourcing: Access to Trained, Specialized Talent
Another major driver of insurance outsourcing is talent acquisition and retention. Recruiting skilled employees represents substantial investments that can be avoided by outsourcing to companies with the required resources already in place. Insurance-focused business process outsourcing (BPO) providers maintain large workforces of trained insurance professionals. By leveraging these offshore talent pools, insurers gain access to specialized expertise without the costs of recruiting and training in-house staff.
Aside from reducing the amount of time and expense spent on recruiting, onboarding, and training, outsourcing also reduces costs. Providers handle all steps of recruitment to secure the best talent for your team, based on your criteria. They are also handling payroll, computers, desks, training, and overall office space along with employment contracts, performance monitoring and most other things your team needs to be successful and productive.
Focusing on Core Competencies
Many insurance companies rely heavily on non-core back-office operations like paperwork processing, data entry, customer service, and claims administration. While important, these functions are not central to most insurers’ competitive advantage. As such, they represent an opportunity for outsourcing.
By delegating these administrative and support tasks to specialized third-party providers, insurers can redirect resources towards core functions like devising competitive insurance products, pricing policies, and managing risk exposure. Outsourcing non-core back-office work allows insurance professionals to focus their efforts on the key capabilities that differentiate the company and drive growth.
Insurance Companies Need to Leverage Technology and Automation
Modern outsourcing providers utilize sophisticated technology infrastructure and automation capabilities that would require substantial investment for an insurer to develop in-house. By leveraging these capabilities through an outsourcing provider, insurers can quickly integrate automated processes without major capital expenditures.
For instance, optical character recognition and intelligent document processing can extract information and data from paperwork and forms much faster than manual data entry. Chatbots and interactive voice response systems can provide 24/7 automated customer service. Predictive analytics tools can flag fraudulent claims or identify risk factors when underwriting new policies.
These technologies enable outsourcing providers to handle high volumes of insurance transactions quickly and accurately. Partnering with companies like IWConnect allows insurers to benefit from better technology and automation without the financial burden of developing it themselves.
Business Process Outsourcing (BPO) Improving Customer Experience
In today’s digital-first insurance environment, customer experience is a key competitive differentiator. Policyholders expect seamless omni-channel service and rapid claims resolution. Meeting these high service expectations requires substantial investments in personnel, training, and technology.
By outsourcing key customer-facing processes to specialized BPO partners, insurers can often improve customer satisfaction. Outsourcing providers use advanced CRM platforms, extensive employee training programs, and optimized workflows to deliver excellent service. Their insurance focus and scale of operations enable a level of customer service that would be difficult for many insurers to match in-house.
Gaining Flexibility and Agility
The insurance sector is prone to unexpected surges in claim volumes following catastrophes like floods, storms, or wildfires. These “hard market” periods place tremendous strain on insurers’ in-house operations. Outsourced operations offer greater flexibility and scalability to handle these fluctuations.
Leading outsourcing providers can rapidly scale up or down by adding new employees and infrastructure to meet changing demands. This level of flexibility allows insurers to easily expand operations during periods of rapid growth or market turmoil. An outsourcing partner can provide crucial agility and resilience that in-house operations may lack.
Conclusion
The insurance industry is shifting rapidly towards outsourced operations and business process management. This trend is driven by a combination of cost savings, efficiency gains, talent acquisition advantages, improved customer service, and increased flexibility. As insurance products and services become increasingly commoditized, insurers will continue to focus on their core competencies while leveraging specialized partners to handle non-core functions. This shift towards outsourcing is reshaping insurance operations and will only accelerate in the years ahead. As you look to take advantage of outsourcing in your insurance business, partner with IWFirstCall. Our deep expertise in insurance processes helps insurers successfully transition operations while realizing the full benefits of outsourcing. Contact us today to learn how we can support your business goals.
